The Intraday Impacts of Wind Energy on Wholesale Electricity Prices and Carbon Emissions in Great Britain

Abstract

This paper studies the intra-day impacts of wind power on wholesale electricity prices and conventional generation in the UK. Exploiting the variations by hour across years from 2008 to 2019, we differentiate the long-run impact of wind power that is largely due to capacity increases and the short-run impact that is primarily driven by weather conditions. The result shows that the expansion of wind energy significantly decreases the electricity price in most hours except the early morning ramp-up and late evening ramp-down hours. We also estimate the substitutional effect of wind energy on conventional generation technologies. Wind generation is found to displace coal and CCGT generation during peak hours. Consequently, this leads to significant reductions in CO2 emissions. The increased wind generation contributed to 24.5MtCO2 reduction per year over the sample period.

Keywords: wind energy, wholesale electricity price, carbon prices, intraday effect