Production Variability in Spot Markets

Time, Date, Venue

14 March 2011, Monday 12.15-13.30

University College London

1st floor Exec-ed room, Engineering Front Building
("Malet place" in Google maps)

Abstract

This presentation analyses whether production variability influences
prices in spot markets such as those for electricity, where wind and
solar power are increasingly important. More precisely, it seeks to
address three inter-related questions: "Does supply variability
influence market prices?", "does asset ownership mediate on the
variability effects?" and "what is the impact of replacing reliable by
intermittent capacity, as opposed to keeping them both?"  We study
these questions analytically, and through simulations. We find that
the relationship between intermittent capacity and prices is negative
and strongly influenced by pivotal dynamics and asset ownership. These
findings are consistent between the theoretical and simulation methods
and robust to changes in the main simulation assumptions.