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The effects of wind power on electricity markets: A case study of the Swedish intraday market

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  • Hu, Xiao
  • Jaraitė, Jūratė
  • Kažukauskas, Andrius

Abstract

We investigate the process of electricity price formation in the Swedish intraday market, given a large share of wind power in the Swedish electricity system. According to Karanfil and Li's (2017) approach, if the intraday market is efficient, with large shares of intermittent electricity in the entire electricity system, intraday prices should send signals based on scarcity pricing for balancing power. Based on this theory, we analyze Swedish electricity market data for the period 2015–2018 and find that the Swedish intraday market, despite its small trading volumes, is functioning properly. In particular, our results show that intraday price premia mostly respond to wind power forecast errors and other imbalances resulting from either supply or demand sides of the electricity market, as they should if the intraday market is efficient. The results of wind power forecast errors hold for central and southern Sweden, but not for northern Sweden where the share of wind power production is still very small. However, we find no effect of unplanned nuclear power plant outages on intraday price premia.

Suggested Citation

  • Hu, Xiao & Jaraitė, Jūratė & Kažukauskas, Andrius, 2021. "The effects of wind power on electricity markets: A case study of the Swedish intraday market," Energy Economics, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:eneeco:v:96:y:2021:i:c:s0140988321000645
    DOI: 10.1016/j.eneco.2021.105159
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    2. Hohl, Cody & Lo Prete, Chiara & Radhakrishnan, Ashish & Webster, Mort, 2023. "Intraday markets, wind integration and uplift payments in a regional U.S. power system," Energy Policy, Elsevier, vol. 175(C).
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    6. Waterson, Michael & Trujillo- Baute, Elisa & Giulietti, Monica, 2022. "Intermittency and the social role of storage," Energy Policy, Elsevier, vol. 165(C).
    7. Henrik Zsiborács & Gábor Pintér & András Vincze & Nóra Hegedűsné Baranyai, 2022. "Wind Power Generation Scheduling Accuracy in Europe: An Overview of ENTSO-E Countries," Sustainability, MDPI, vol. 14(24), pages 1-58, December.
    8. Jun Dong & Dongran Liu & Xihao Dou & Bo Li & Shiyao Lv & Yuzheng Jiang & Tongtao Ma, 2021. "Key Issues and Technical Applications in the Study of Power Markets as the System Adapts to the New Power System in China," Sustainability, MDPI, vol. 13(23), pages 1-29, December.

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    More about this item

    Keywords

    Day-ahead market; Electricity; Forecast errors; Intraday market; Intraday price premia; Nuclear power outages; Sweden; Wind power;
    All these keywords.

    JEL classification:

    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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