Increase in wind power towards 2020 : an analysis of how the increase in wind power will affect the hydro power market

Abstract

This research study focuses on the potential increase in wind power caused by incentives made to increase the share of renewable production. There are estimated sensible supply and demand curves based upon the two stage least square regression analysis with the use of instruments. The data used are collected mainly from Nord Pool Spot and Norwegian Water Resources and Energy Directorate. The regression analysis has been done using STATA.

The analysis is based upon two different markets, one hydropower market (NO1) and one combined market consisting of thermal and wind power (DK1). There are made 24 supply and demand curves for each market, one for every hour of the delivery day. There have been done simulations in Matlab with increase in wind power in DK1. The results show that when only increasing the wind power generation the prices will decrease. When expanding the transmission capacity the price effect becomes ambiguous. The increase in wind power will for high inflow periods increase the overflow in the hydro power market.