Wind power production in the Nordic region has increased on average at one percent monthly rate over the last 13 years. The Nordic renewable energy expansion path for the coming 5-10 years will further speed up the entry of the renewable capacity. The subsidized entry of technologies that operate with zero marginal costs lead to a potentially significant reduction in the final wholesale prices. This presents a serious challenge to the Nordic market design that is based on the idea of marginal cost pricing. The traditional technologies may face a situation where they can no longer cover their running costs in a market-based manner. In this report, we first quantify the pressure on prices and operating revenues that follows from the current subsidized entry of wind generation. We find that about 20-30 percent of the price reduction in the Nordic market is attributable to the wind generation. We then quantify the impact of the Swedish nuclear power phase-down on the market. We find that the phase-down plan can more or less neutralize the impact of wind on the market prices, although the transition - increasing wind and declining nuclear - creates winning and losing technologies.
|Commissioning body||Energiforsk – The Swedish Energy Research Centre|
|Number of pages||22|
|Publication status||Published - 2016|
|MoE publication type||D4 Published development or research report or study|
- Climate change
- renewable energies