Gone with the Wind?: Electricity Market Prices and Incentives to Invest in Thermal Power Plants under Increasing Wind Energy Supply

Thure Traber and Claudia Kemfert

No 852, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The increased wind energy supplied to many electricity markets around the world has to be balanced by reliable back upunits or other complementary measures when wind conditions are low. At the same time wind energy impacts both, the utilization of thermal power plants and the market prices. While the market prices tend to decrease, the impact on theutilization of different plant types is at the outset unclear. To analyze the incentives to invest in thermal power plants under increased wind energy supply, we develop a computational model which includes start-up restrictions and costs and apply it to the German case. We find that due to current wind supply the market prices are reduced by more than five percent, and the incentives to invest in natural gas fired units are largely decreased. An increased wind supply erodes their attractiveness further. Consequently, a gap between the need for and the incentive to provide exibility can be "expected".

Keywords: Electricity market modeling; start-up costs; wind energy; oligopoly; Germany (search for similar items in EconPapers)
JEL-codes: C63 L13 L94 Q42 (search for similar items in EconPapers)
Pages: 16 p.
Date: 2009
New Economics Papers: this item is included in nep-ene
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.diw.de/documents/publikationen/73/diw_01.c.93762.de/dp852.pdf (application/pdf)

Related works:
Journal Article: Gone with the wind? -- Electricity market prices and incentives to invest in thermal power plants under increasing wind energy supply (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp852

Access Statistics for this paper

More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().