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Supply curves for hydro reservoirs – Estimation and usage in large-scale electricity market models

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  • Jahns, Christopher
  • Podewski, Caroline
  • Weber, Christoph

Abstract

Hydro electricity generation is of great importance for the current and the future electricity system since it provides electricity without emitting CO2 and hydro reservoirs offer high operational flexibility. With increasing shares of fluctuating renewable energies, their value is even expected to increase, as – depending on the power plant type – they can store electricity. Therefore, an adequate representation of hydro power operation in large-scale electricity models is primordial. This paper aims to analyse empirically the operation of large-scale hydro reservoirs based on observed market data. We derive supply curves for hydro reservoirs in Norway based on electricity price and hydro production time series and analyse key influencing factors. To push further, we apply the resulting supply curves in a multi-region electricity market model and show how they may be used to perform historical and counterfactual simulations.

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  • Jahns, Christopher & Podewski, Caroline & Weber, Christoph, 2020. "Supply curves for hydro reservoirs – Estimation and usage in large-scale electricity market models," Energy Economics, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:eneeco:v:87:y:2020:i:c:s0140988320300359
    DOI: 10.1016/j.eneco.2020.104696
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    Cited by:

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    3. Peña, Juan Ignacio, 2024. "A note on hydropower as a marginal price setter for Spain's electricity market in 2021–2022," Utilities Policy, Elsevier, vol. 87(C).
    4. Claudia Condemi & Loretta Mastroeni & Pierluigi Vellucci, 2021. "The impact of Clean Spark Spread expectations on storage hydropower generation," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 44(2), pages 1111-1146, December.

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    More about this item

    Keywords

    Hydropower; Water value; Econometric models; Large-scale electricity market models;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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