Wind power integration, negative prices and power system flexibility - An empirical analysis of extreme events in Germany

Nicolosi, S. (2010): Wind power integration, negative prices and power system flexibility - An empirical analysis of extreme events in Germany.

Abstract

This article analyses the flexibility of the German power market with respect to the integration of an increasing share of electricity from renewable energy sources. Flexibility limiting system components, which cause negative prices are explained and illustrated for the German market. Then, the decision of the European Energy Exchange in Leipzig (EEX) to allow negative price bids is explained. Empirical data show the flexibility of conventional generating capacities in Germany during the considered time frame from October 2008 until November 2009. Of the 71 hours with negative spot prices, ten hours were significantly negative with prices of at least -100€/MWh. These extreme hours are analysed in greater detail by the examination of the different system components. Thereby, load, wind power infeed and conventional generation by fuel type are observed as well as the market for negative tertiary reserve as indicators for market tightness. It will be shown that although the market situations were severe, under current conditions it could have been much worse under certain circumstances. Furthermore, the long-run implications of an increasing RES-E share on the conventional generation capacity are discussed. The article concludes with an outlook on additional power system flexibility options.

• Item Type: MPRA Paper
• Language: English
• Keywords: Electricity markets, negative prices, renewable electricity integration, wind power
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply ; Prices; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D41 - Perfect Competition; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L94 - Electric Utilities

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