The Effects of German Wind and Solar Electricity on French Spot Price Volatility: An Empirical Investigation

Adhurim Haxhimusa

Publication: Working/Discussion PaperWU Working Paper

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Abstract

We examine the relationship between German wind and solar electricity and French spot price volatility. Using hourly data, we find that French imports from Germany driven by German wind and solar electricity sometimes decrease, sometimes increase the volatility of French spot prices. These two opposing effects depend on the shape of the French supply function and on the French demand. We, therefore, estimate different coefficients for imports depending on different demand levels. We acknowledge the endogeneity problem in identifying these effects and employ instrumental variable techniques to circumvent this problem. Our results show the urgent need for further coordination of national energy policies in order to reduce the potential for negative spill over effects of nationally driven energy policies in neighbouring countries as European electricity markets are becoming more integrated.
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 2018

Publication series

NameDepartment of Economics Working Paper Series
No.258

WU Working Paper Series

  • Department of Economics Working Paper Series

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