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Get Paid to Consume Power: How Wind Energy Leads to Negative Electricity Prices
Jönköping University, Jönköping International Business School.
2025 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

In the past two years, electricity markets in the Nordics have experienced a new phenomenon in price dynamics, characterized by a growing occurrence of negative prices, largely associated with the rapid expansion of wind power in Sweden. To investigate the extent to which increasing wind power contributes to the likelihood of negative electricity prices in the Nord Pool market, a Markov-Switching Dynamic Regression (MSDR) model, supported by a logistic regression framework, was implemented. The results suggest that rising wind power tends to decrease electricity prices, increasing the probability of negative price events, with the effect being more pronounced in regimes characterized by high volatility. Moreover, the findings indicate that hydropower production helps stabilize price dynamics, thereby mitigating the likelihood of negative prices. These results highlight the importance of flexible generation in maintaining price stability under the expansion of renewable energy sources.

Place, publisher, year, edition, pages
2025. , p. 45
Keywords [en]
Negative Electricity Prices, Wind Penetration, Markov-Switching Dynamic Regression, Renewable energy, Day-ahead market, Nord Pool
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-68840OAI: oai:DiVA.org:hj-68840DiVA, id: diva2:1973775
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Examiners
Available from: 2025-06-24 Created: 2025-06-19 Last updated: 2025-10-13Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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  • en-US
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  • nn-NB
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Output format
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