Renewable Risk and Its Impacts on Market Prices: The German Case
24 Pages Posted: 2 Aug 2021 Last revised: 16 Aug 2021
Date Written: July 20, 2021
This paper develops a framework for renewable producers to withhold capacity from the day-ahead market in response to higher renewable output risk. The developed hypotheses are tested on a rich dataset from the German electricity market, with a novel measure of renewable forecast risk. The data does not support the presence of renewable withholding in Germany, based on the observed risk premium and day-ahead supply bids. This suggests that firms do not have access to this information or do not regard this as relevant.
Keywords: Risk, Renewables, Trading, Forecast
JEL Classification: Q47, Q41, Q48
Suggested Citation: Suggested Citation