Research-Thesis: Assessment of intermittent renewable energy: impact of exchange

Abstract

Intermittent renewables decrease the spot price thanks to their ’zero marginal cost’. The price depends on the marginal cost of the last energy produced, which is the most expensive (’merit-order effect’). The intermittent renewable production is volatile and therefore the price is. The second problem is that sometimes the supply is too high for the demand. This incites to sell at negative price, which represents a problem for the deployment of clean energy. Exchanges of energy helps to reallocate a part of the domestic supply to foreign markets, which increases the domestic price. In the literature, analyses often assume ’island economy’ (no exchange). This Master thesis analyses the impact of international transmissions on the hourly day-ahead price and the place of international trades to reduce the risk of negative day-ahead price. The method is separated in three parts: ARDL models, VAR model and descriptive statistics-based analysis of negative price. Along the analysis, the readers will notice that the problems of autocorrelation and heteroscedasticity are omni-present. The third part explains the potential origin of heteroscedasticity. The dissertation concludes that exchanges can reduce the risk of negative price by reducing the domestic supply of energy. However, exchanges should be considered as a part of the solution among many tools.