Intini, Mario and Waterson, Michael (2020) Do British wind generators behave strategically in response to the Western Link interconnector? Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1242). (Unpublished)

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Abstract

In Britain, the key source of renewable generation is wind, most abundant on the west coast of Scotland, where there is relatively little demand. For this reason, an interconnector, the Western Link, was built to take electricity closer to demand. When the Link is operating, payments by National Grid to constrain wind farms not to produce will be lower, we may predict, since fewer or less restrictive constraints need be imposed. But the Link has not been working consistently. We empirically estimate the link’s value. Focusing on the three most recent episodes of outage, starting on 4th May 2018 up to 25th September 2019, our essential approach is to treat these outages as a natural experiment using hourly data. Our results reveal that the Link had an important role in costs saved and price constrained and MWh curtailed reductions. We estimate a cost-saving of almost £30m. However, the saving appears to drop over time, so we investigate wind farms’ behavior. We find that wind farms behave strategically since the accuracy of wind forecasting depends on the relevant prices impacting their earnings.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HD Industries. Land use. Labor Q Science > QC Physics T Technology > TK Electrical engineering. Electronics Nuclear engineering
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Interconnects (Integrated circuit technology) , Electric utilities -- Great Britain, Wind power industry -- Economic aspects -- Great Britain, Wind power plants, Wind power, Wind forecasting , Wind energy conversion systems, Wind power plants -- Cost effectiveness
Series Name:	Warwick economics research papers series (WERPS)
Publisher:	University of Warwick. Department of Economics
Place of Publication:	Coventry
ISSN:	0083-7350
Official Date:	February 2020
Dates:	Date Event February 2020 Published
Date of first compliant deposit:	21 February 2020
Number:	1242
Number of Pages:	28
Institution:	University of Warwick
Status:	Not Peer Reviewed
Publication Status:	Unpublished
Access rights to Published version:	Open Access
Description:	This paper also appears as CAGE Discussion paper 455

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