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

Haxhimusa, Adhurim (2018) The Effects of German Wind and Solar Electricity on French Spot Price Volatility: An Empirical Investigation. Department of Economics Working Paper Series, 258. WU Vienna University of Economics and Business, Vienna.

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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.

Item Type: Paper
Keywords: wind and solar electricity / price volatility / market integration / electricity markets
Classification Codes: JEL F15, L81, L98, Q42, Q48
Divisions: Departments > Volkswirtschaft
Depositing User: Claudia Tering-Raunig
Date Deposited: 25 Jan 2018 11:12
Last Modified: 05 Feb 2018 10:00
URI: http://epub.wu.ac.at/id/eprint/6019

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