Relation between wind,electricity prices and emissions in Ireland by - Valeria di Cosmo at IEA Task 26 Cost and Value of Wind Energy seminar.

1. Relation between wind,electricity prices and emissions in Ireland
Relation between wind,electricity prices and
emissions in Ireland
Valeria Di Cosmo and Laura Malaguzzi Valeri
Economic and Social Research Institute, Ireland
Trinity College Dublin, Ireland
IEA Wind Task
26th May
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2. Relation between wind,electricity prices and emissions in Ireland
The Irish Single Electricity Market: SEM
Why Ireland?
Main characteristics of Irish Single Electricity Market:
Compulsory market
System-wide data, publicly available on (half)hourly basis
Limited interconnection with other systems (GB)
Easier to identify effect of wind
Wind has grown from 900MW to 2100MW between 2008 and
2012 (8.1% to 16.6% of demand)
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3. Relation between wind,electricity prices and emissions in Ireland
Data
Data
1. Most of the data come from SEM-O and Eirgrid + SONI
2. Half-hourly data from Jan 2008 to 28 August 2012 on
System Demand (Eirgrid+ SONI data)
Prices
Shadow Price
Wind generated (Eirgrid +SONI data)
Plant availability
Electricity generated by plant
Technical characteristics of plants
3. Daily fuel prices (Datastream)
4. Power plant bids
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4. Relation between wind,electricity prices and emissions in Ireland
Shadow price
Shadow Price
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5. Relation between wind,electricity prices and emissions in Ireland
Shadow Price
Shadow price determinants: fuels, daily data
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6. Relation between wind,electricity prices and emissions in Ireland
Shadow Price
Shadow price determinants: loads, hourly data
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7. Relation between wind,electricity prices and emissions in Ireland
Shadow Price
Shadow Price: Model choice
Aggregate data to hourly level
Plants bid price-quantity pairs for all hours of following day.
Each hour of day can be thought of as a separate contract.
Estimate simultaneous system of equations
residuals correlated across groups (hours of day)
correction for autocorrelation within groups (AR1)
System of equations with i = 1,...n,...24 (number of hours)

8. Relation between wind,electricity prices and emissions in Ireland
Shadow Price
Shadow Price: model
System of equations with i = 1,...n,...24 (number of hours)



P1,d = α1 + h βh
1 Lh
1,d + γ1W1,d + j ζ
j
1F
j
1,d−1
+ µi COd−1 + θ1mar1,d + κs
Ds
1 + 1,d
...
Pi,d = αi + h βh
i Lh
i,d + γi Wi,d + j ζ
j
i
F
j
i,d−1
+ µi COd−1 + θi mari,d + κs
Ds
i + i,d
...
PN,d = αN + h βh
N Lh
N,d + γN WN,d + j ζ
j
N
F
j
N,d−1
+ µi COd−1 + θN marN,d + κs
Ds
N + N,d
(1)
where
P = shadow price
L = demand
W = wind
F = fuel prices
CO = CO2 permit prices
mar = generation margin
D = dummy variables (months, day of week, Moyle and Turlogh Hill outages)

9. Relation between wind,electricity prices and emissions in Ireland
Shadow Price
Results
1. Loads positive and significant
2. Fuel prices positive and significant
3. CO2 price and generation margin negative and significant
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10. Relation between wind,electricity prices and emissions in Ireland
Shadow Price
Average effect of wind on shadow price
Hours Average
effect
Average
effect
1 -0.003 13 -0.007
2 -0.003 14 -0.005
3 -0.004 15 -0.004
4 -0.004 16 -0.005
5 -0.004 17 -0.004
6 -0.003 18 -0.002
7 -0.003 19 -0.010
8 -0.003 20 -0.013
9 -0.006 21 -0.008
10 -0.003 22 -0.002
11 -0.005 23 -0.003
12 -0.006 24 -0.003
Significant coefficients in bold
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11. Relation between wind,electricity prices and emissions in Ireland
Shadow Price
Average effect of wind on shadow price
Average effect of the wind on the shadow price for all the
hours of the day equal to -0.048.
Given the average installed capacity (500MW), the wind has
reduced the average price by the 0.48%
Wind generation has strongest (negative) effect on shadow
price:
at night, when statistically blows more
at peak hours, when avoids peak plants from entering merit
order

12. Relation between wind,electricity prices and emissions in Ireland
CO2 Emissions
CO2 Emissions
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13. Relation between wind,electricity prices and emissions in Ireland
CO2 Emissions
CO2: Methodology
1. Building CO2 emissions variable, determine fuel use by plant:
electricity generated by plant
efficiency curve (depends on output)
2. Use CO2 content of each fuel to calculate each plant’s
emissions per period
3. Combine all plants to define total CO2 emissions per period

14. Relation between wind,electricity prices and emissions in Ireland
CO2 Emissions
CO2: Methodology
Time-series regression, with one lag in the disturbances:
COt = α + βLi
t + γWt + µPCt−24 + θgascoalratiot−24 + νTHOutt + ζTHOutt .Wt
+λMoyleOutt + φMoyleOutt .Wt + κs
Ds
t + t
(2)
where t = ρ t−1 and
COt = Carbon dioxide emissions
L = demand
W = wind
PC = CO2 permit prices
D = dummy variables (months, day of week)
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15. Relation between wind,electricity prices and emissions in Ireland
CO2 Emissions
CO2 effects, 2008-2012
Table: CO2 effects, half-hourly data, 2008-2012
y=Emissions Coefficients
Load1to4 0.45***
(-0.01)
...
Load19to20 0.48***
(0.00)
Windgeneration(MWh) -0.46***
(-0.01)
CO2pricet−24 -0.53
(-0.75)
Gascostt−24/Coalcostt−24 15.11***
(-3.65)
Tur.Hill Outage dummy -6.80***
(-3.02)
Tur.Hill Out ∗ WindGen 0.04***
(-0.01)
Moyle Outage dummy 48.21***
(-9.53)
Moyle Out ∗ WindGen -0.02*
(-0.01)
Month-Year dummies Yes***
Day of Week dummies Yes***
AR(1) 0.89***
(0.00)
Constant 96.19***
-19.38 15

16. Relation between wind,electricity prices and emissions in Ireland
CO2 Emissions
Effect of wind on emissions, by year
Year Wind (MWh/hour) Wind coeff. Avg. CO2 emissions(t/MWh)
2008 325 -0.48 0.51
2009 419 -0.45 0.47
2010 373 -0.43 0.48
2011 600 -0.42 0.45
2012 558 -0.46 0.49
Source: own calculations.
Note: 2012 up to August 28.
Wind decreases CO2 emission less than the average MWh
emissions of the system
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17. Relation between wind,electricity prices and emissions in Ireland
Conclusions
Conclusions
Studied Single Electricity Market of Ireland:
Little interconnection with other systems (at least up to 2012)
Compulsory pool system (comprehensive data)
Generators have to bid marginal cost
Doubling of wind installed in 4+ years analysed
Findings:
Small and negative effect of wind generation on Shadow Price
Effect tends to be larger at night and at peak periods
Wind decreases CO2 emissions, but less than expected
Thermal plants run at less than fully efficient level
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