On the Impact of Wind Feed-in and Interconnections on Electricity Price in Germany


  • Francois Benhmad
  • Jacques Percebois




Electricity spot prices, merit order effect, volatility


In this paper, we explore carry out an empirical analysis for Germany, as a country with high penetration of wind energy, to investigate the interaction between the well-known merit-order effect, i.e., falling spot price levels as well as highly fluctuating spot prices and the European electricity grids inteconnections,i.e., market coupling.
Our main empirical findings suggest that wind power in-feed decreases electricity spot price level but increases spot prices volatility. Furthermore, the relationship between wind power and spot electricity prices can be strongly impacted by European electricity grids interconnection which behaves like a safety valve lowering volatility and limiting the price decrease. Therefore, the impacts of wind generated electricity on electricity spot markets are
less clearly pronounced in interconnected systems


BMU (2013), “Renewable Energies Driving Germany’s Energiewende”, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, www.bmu.de/english · www.erneuerbare-energien.de (Octore 2013)

Bode and Groscurth( 2006). “The Effect of the German Renewable Energy Act (EEG) on the electricity price”, published as HWWA Discussion Paper 358.

Bollerslev(1986). “Generalized autoregressive conditional heteroskedasticity”. Journal of Econometrics 31, 309–328.

Box and Jenkins (1970). “Time Series Analysis Forecasting and Control”, San Francisco.

Dickey and Fuller (1981). “Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root” Econometrica 49, 1057-1072.

Engle (1982). “Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation”, Econometrica 50(4) p 987-1007.

ENTSO-E (2012). “Load and consumption data: Specificities of member countries”, Report, European Network of Transmission System Operators for Electricity, Brussels.

Escribano et al. (2011). “Modeling electricity prices: International evidence”. Oxford Bulletin of Economics and Statistics, 622–650.

Jonsson et al. (2010). “On the market impact of wind energy forecasts”, Energy Economics 32 (2), 313–320.

Keles et al.(2011). “Comparison of extended mean reversion and time series models for electricity spot price simulation considering negative prices”. Energy Economics.

Knittel and Roberts (2005). “An empirical examination of restructured electricity prices”, Energy Economics 27 (5), 791–817.

Mugele (2005). “Stable modeling of different European power markets”, Investment Management and Financial Innovations 2 (3), 65–85.

Munksgaard and Morthorst (2008). “Wind power in the Danish liberalised power market Policy measures, price impact and investor incentives”, Energy Policy 36 (10), 3940–3947.

Neubarth et al. (2006). “Influence of Wind Electricity Generation on Spot Prices (Beeinfl ussung der Spotmarktpreise durch Windstromerzeugung)”, Energiewirtschaftliche Tagesfragen 56 (7), 42–45. Issue 7.

Neuhoff, V.-K., Bach, S., Diekmann, J., Beznoska, M. and El-Laboudy,T.(2012). Rising EEG Surcharge: Undesirable Distribution Effects Can Be Reduced, DIW Wochenbericht Nr. 41.2012

Nicolosi and Fürsch (2009). “The impact of an increasing share of RES-E on the conventional power market - The example of Germany”, Zeitschrift für Energiewirtschaft 3, 246–254.

OECD IEA (2011) “World Energy Outlook”, Paris

Sáenz de Miera et al (2008). « Analysing the impact of renewable electricity support schemes on power prices: The case of wind electricity in Spain”, Energy Policy 36 (9), 3345–3359.

Sensfuss (2008). “Merit Order Effect: A Detailed Analysis of the Price Effect of Renewable Electricity Generation on Spot Prices in Germany”, Energy Policy, 36, 8, 3086– 3094.

Sioshansi (2013). “Evolution of global Electricity markets”. Ed.Elsevier, June 2013.

Stoft (2002). “Power System Economics: Designing Markets for Electricity,” IEEE Press Wiley-Interscience, New York, 2002.

Weigt (2008). “Germany’s Wind Energy: The Potential for Fossil Capacity Replacement and Cost Saving”, Applied Energy, 86, 1857–1863.

Woo et al. (2011). “The impact of wind generation on the electricity spot-market price level and variance: The Texas experience”, Energy Policy 39 (7), 3939–3944. Energy Studies Review Vol 23 2016 39