Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100219
Authors: 
Di Cosmo, Valeria
Malaguzzi Valeri, Laura
Year of Publication: 
2012
Series/Report no.: 
Working Paper, The Economic and Social Research Institute (ESRI), Dublin 446
Abstract: 
In a deregulated market, the decision to build new thermal power plants rests with private investors and they will decide whether to invest on the basis of expected profits. This paper evaluates how such profits are affected by the increasing presence of wind generation. We use hourly historical data for the Irish Single Electricity Market, a compulsory pool market with capacity payments, and simulate future series of electricity shadow prices, bids of representative plants and wind generation. We estimate the correlation between shadow price and installed wind capacity on the basis of past data, finding a negative correlation. We then evaluate the effects of increased wind capacity on thermal power plants' expected profits. We find that increasing installed wind from the current level of 2000MW to about 3000MW causes a larger decrease in profits for baseload gas plants and a smaller decrease for less flexible coal-fuelled plants. The decrease in profits is of the order of 1 to 2 per cent.
Subjects: 
electricity
generation incentives
simulation
wind generation
Ireland
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.