Download this Paper Open PDF in Browser

Cross Border Impacts of Renewable Energy Sources in Central Western Europe

31 Pages Posted: 8 Mar 2017  

Fernando Oster

Technische Universität Berlin (TU Berlin)

Georg Peter Erdmann

Technische Universität Berlin (TU Berlin)

Date Written: March 7, 2017

Abstract

Alongside the remarkable deployment of renewable energy sources for electricity in Europe the power markets are growing together. An analysis focusing not only on domestic but also on cross border impacts is therefore of interest. We consider the interaction between the electricity markets of France, Germany, the Netherlands and Belgium (Central Western Europe region or CWE) which are technically and economically closely connected. More precisely, we study the international impacts of renewable energy sources for electricity and quantify possible spillover effects on prices. We choose two different approaches to tackle the question: A toy model infers causal relationships and an econometric time series analysis with high frequency data quantifies the effects of interest. With rising renewable electricity production from wind and solar in different market areas, challenges in analysis arising from multicollinearities become more pronounced and are addressed. We find that renewable energy sources in one region indeed have a depressing impact on prices of bordering bidding zones even in countries which do not have direct physical interconnections. This effect is quantified in monetary units for the years between 2012 and 2015. The influence of German renewable energy sources over one year on the Netherlands, Belgium and France is of the same order of magnitude than the influence of the corresponding domestic renewables on the respective domestic markets.

Keywords: Merit-Order Effect, Spillover Effect, Renewables, Europe

Suggested Citation

Oster, Fernando and Erdmann, Georg Peter, Cross Border Impacts of Renewable Energy Sources in Central Western Europe (March 7, 2017). USAEE Working Paper No. 17-303. Available at SSRN: https://ssrn.com/abstract=2928823

Fernando Oster (Contact Author)

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17
Juni 135
Berlin, 10623
Germany

Georg Peter Erdmann

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17
Juni 135
Berlin, 10623
Germany

Paper statistics

Downloads
18
Abstract Views
129