Universität zu Köln

Koolen, Derck, Bunn, Derek and Ketter, Wolfgang ORCID: 0000-0001-9008-142X (2021). Renewable Energy Technologies and Electricity Forward Market Risks. Energy J., 42 (4). S. 43 - 68. CLEVELAND: INT ASSOC ENERGY ECONOMICS. ISSN 1944-9089

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Abstract

We analyse how the introduction of the same renewable energy technology at different parts of the electricity supply chain has different price formation effects on wholesale power markets. We develop a multi-stage competitive equilibrium model to evaluate the effects on short-term price formation of a technology shift from conventional to both large-scale renewable energy production (e.g. wind and solar farms) and distributed renewable energy sources (e.g. rooftop solar). We find that wind and solar technologies oppositely affect the forward risk premium, and this is related to technology-varying, risk-related hedging pressures of producers and retailers. We form a multi-factor propositional framework and empirically validate the model by analyzing data from California and Britain; two markets which recently experienced significant increases of renewable power, in terms of utility scale and distributed sources. The work is innovative in showing theoretically and empirically how different types of renewable technologies influence market price formation differently. This has implications for market participants facing wholesale price risks, as well as regulators and policy-makers.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Koolen, Derck UNSPECIFIED UNSPECIFIED UNSPECIFIED Bunn, Derek UNSPECIFIED UNSPECIFIED UNSPECIFIED Ketter, Wolfgang UNSPECIFIED orcid.org/0000-0001-9008-142X UNSPECIFIED
URN:	urn:nbn:de:hbz:38-583156
DOI:	10.5547/01956574.42.4.dkoo
Journal or Publication Title:	Energy J.
Volume:	42
Number:	4
Page Range:	S. 43 - 68
Date:	2021
Publisher:	INT ASSOC ENERGY ECONOMICS
Place of Publication:	CLEVELAND
ISSN:	1944-9089
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Center of Excellence C-SEB Faculty of Management, Economics and Social Sciences > Business Administration > Information Systems > Chair for Information Systems and Systems Development
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language FUTURES PRICES; POWER; SPOT Multiple languages Economics; Energy & Fuels; Environmental Studies Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/58315