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What Fuels the Volatility of Electricity Prices?

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Abstract

We use emergency outages of coal generators as an exogenous source of variation in the power generation stack to study how changes in marginal fuel affect real-time prices. Contrary to anecdotal evidence, we find that wholesale prices are less volatile when natural gas is on the margin more often.

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  • Jeremy Lin & Alessio Saretto & Anastasia Shcherbakova, 2024. "What Fuels the Volatility of Electricity Prices?," Working Papers 2408, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:98977
    DOI: 10.24149/wp2408
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    References listed on IDEAS

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    1. Tostado-Véliz, Marcos & Horrillo-Quintero, Pablo & García-Triviño, Pablo & Fernández-Ramírez, Luis M. & Jurado, Francisco, 2024. "Optimal sitting and sizing of hydrogen refilling stations in distribution networks under locational marginal prices," Applied Energy, Elsevier, vol. 374(C).

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    More about this item

    Keywords

    policy; spillovers; electricity; price volatility; Fuel; Environmental policy;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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