Utilize este identificador para referenciar este registo:
https://hdl.handle.net/1822/87281
Título: | Trade, renewable energy, and market power in power markets |
Autor(es): | Brekke, Kurt R. Straume, Odd Rune Sørgard, Lars |
Palavras-chave: | Hydropower Trade Market power |
Data: | Nov-2023 |
Editora: | Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
Resumo(s): | Energy markets are undergoing a radical shift towards renewable energy and network integration. We study the effects of integrating regions with storable (hydro) and intermittent (wind) energy sources in the presence of Market power. Based on a two-period model with price fluctuations in the wind power region and bottlenecks in transmission of energy between regions, we show that a dominant firm (facing a competitive fringe) has an incentive to reallocate more hydropower production to the low-price period in order to induce higher prices in the high-price period. This incentive might be so strong that the bottleneck in the low-price period is removed and the two regions become de facto integrated. Paradoxically, we find that higher hydropower production capacity and/or larger transmission capacity can lead to higher (average) prices in the hydropower region due to the strategic responses by the dominant firm. Moreover, we find that the presence of market power in many cases enables the dominant firm to appropriate a larger share of the surplus from trade without harming domestic consumers, implying that stronger competition in the hydropower region might not be welfare improving. |
Tipo: | Documento de trabalho |
URI: | https://hdl.handle.net/1822/87281 |
Versão da editora: | https://nipe.eeg.uminho.pt/publicacoes-nipe/#documentos-de-trabalho |
Arbitragem científica: | no |
Acesso: | Acesso aberto |
Aparece nas coleções: | NIPE - Documentos de Trabalho |
Ficheiros deste registo:
Ficheiro | Descrição | Tamanho | Formato | |
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WP-10.2023.pdf | Trade, renewable energy, and market power in power markets | 535,3 kB | Adobe PDF | Ver/Abrir |