Volatilidad de una acción con respecto al mercado

There are two main ways in which the need for electricity system flexibility has been approached through the electricity market (not counting the need for ancillary services such as short-circuit power and voltage control as increasing with the proportion of wind power in the system, and the idea that an increased amount of fluctuating electricity generation will require a greater amount of resources for system balancing, as suggested above). One relates to securing the value of electricity produced by wind turbines at all times, and the other pertains to keeping a sufficient amount of production capacity available for periods with little or no wind. In the context of this account of wind power integration as a matter of increasing the liquidity of wholesale electricity through a process of market construction, mainly the first of these two issues is addressed. The intermittency problem was approached by considering the value, i.e. utility, of electricity produced by wind turbines as mirrored in its price. Thus, in accordance with neoclassical economics (e.g. Marshall, 1920) it was found that:

The value of wind power will in a market-based system be expressed as the value that the market ascribes the production, directly expressed through the price of electricity. The price that the wind turbine can sell its production for in the market can be regarded as the socioeconomic value of wind turbine power production

(Aarhus Municipality, 2012, p. 14) As the price paid for wind power is taken to represent its value, it becomes an expression of how good the Danish energy system is at handling, or valuing, volatile electricity production from wind turbines. In going through the market as represented by economics and introduced in the form of the Nord Pool arrangement, it was established that the market price of wind power mirrors the system-wide utility of wind power. This means that a precise albeit hard to realize assessment of the system-wide utility of wind power can be made by comparing the average price paid for electricity sold by wind power producers over a year with the average price paid for electricity over a year. However, a simpler estimate of the electricity system's ability to utilize volatile electricity production from wind turbines as expressed through market valuation has been developed. This

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alternative focuses on the amount of hours during a year when the price of electricity produced by wind turbines is low, zero, or negative.10

Going through the market allowed the actors associated with the approach to take the position that low, zero, and negative prices paid for electricity from wind turbines were what needed to be avoided in the quest for renewable energy integration. The challenge of solving the intermittency problem was thus reconfigured into a matter of formatting the electricity market so as to prevent the making of low, zero or negative prices for electricity produced by wind turbines. The simpler estimate is made by counting the amount of hours during a year where the price paid for electricity is low, zero, or negative in a given zone (Aarhus Municipality, 2012). Wind power integration as electricity valuation is thus presented as a short-term concern. But before moving on it is worth stressing that it also has a long-term dimension:

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 Prices of zero and below occur in a pricing zone as supply comes closer to exceeding demand  while factoring in transmission capacity. Negative prices were introduced in Nord Pool in 2009  in  order  to  incentivize  suppliers  to  stop  producing  in  periods  when  there  is  close  to  critical  excess electricity in the system, and urge buyers to consume in these periods by paying them  for consuming electricity. Excess electricity production resulting in a price of zero has occurred  to a varying extent since 2002, with a clear majority of the instances taking place in the price  zone  for  western  Denmark  (DK1).  The  instances  were  in  part  caused  by  two  different  arrangements  which  sometimes  worked  in  concert.  One  was  the  fixed  subsidy  paid  to  wind  power producers for every kilowatt hour delivered to the electricity system, regardless of the  market price. The tariff implied that offloading electricity from wind power in the grid was still  attractive  even  though  the  price  was  zero.  Another  driver  of  overproduction  is  the  technological configuration of large conventional thermal power plants. As ramping traditional  coal‐fired thermal power plants up and down is both expensive and time consuming, it would  periodically be more enticing to produce at a price of zero rather than have to ramp down.  With the introduction of negative prices, Spot Market prices got the ability to reflect ‘physics’  or the need for regulating the electricity system to a greater degree (Energinet.dk, 2010a). And  the  potential  for  producing  negative  prices  is  understood  to  have  made  electricity  suppliers  react  by  adjusting  their  plants  in  a  way  so  as  to  try  to  avoid  having  to  pay  for  offloading  electricity  in  the  grid  (Lindboe,  2011).  Electricity  producers  who  were  able  to  change  their  production systems were incentivized to do so in a manner helping to ensure that fewer low,  zero,  or  negative  prices  were  made.  In  this  way,  wind  power  integration  was  propelled  forward. 

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If a large part of the produced wind power electricity is sold at low or negative prices it damages the wind turbine’s economy and thereby reduces the incentive to invest in new wind turbines. For this reason it is crucial to ensure the value of wind, both to maintain its socioeconomic value, and in order to preserve the economic foundation for continued wind power development

(Aarhus Municipality, 2012, p. 11) In this way, wind power integration by means of altering the conditions for valuing electricity from wind turbines also became a matter of securing investment in production capacity in the long term. The second aspect of the intermittency problem within the framework of the electricity market implies securing sufficient production capacity for periods with little or no wind power production. As an increasing proportion of electricity produced by wind turbines is put on the market, electricity prices tend to fall and thermal power plants come to produce less. The lower prices and smaller aggregate production lowers the income of conventional electricity producers, which in turn means that it becomes less attractive to run common types of thermal power plants. This suggests that an increased proportion of electricity produced by wind turbines will make it harder to ensure sufficient capacity in periods with little or no wind. The problem is thus associated with the way thermal power plants possessing the ability to increase production when needed become less attractive as objects of investment.

Problematizing wind power integration in this way begins to make sense when considered in light of how the marginal price-based auction at Nord Pool works. In windy periods, wind turbines tend to push conventional thermal power plants out of merit in the Spot Market by offering to sell large amounts of electricity at a low price. The low asking prices to sell electricity from wind power are in principle called for by the uniform pricing principle of the Spot Market auction. By paying all producers within merit a price corresponding to what was asked by the marginal electricity supplier in the blind double-sided auction, sellers should be incentivized to ask “…their marginal opportunity costs of producing electricity, which reflect variable expenses incurred in producing electricity or the foregone opportunity to sell electricity at another time or into another market” (Tierney, Schatzki & Mukerji, 2008, p. 7). Such an asking strategy should in the context of the auction help ensure to the greatest possible extent that the supplier stays within

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merit and is paid the market clearing price, without risking bidding so low as to suffer an avoidable loss.

When taking into account the fact that electricity production from wind turbines implies zero fuel costs, the reason why conventional electricity production is pushed out of merit becomes apparent. Adding to this is the fact that low prices related to large amounts of wind power production tend to make hydroelectric power plants pump up capacity and hold back their production until electricity prices rise. The dynamics between wind turbines and hydropower plants thus has a “…price-deflating effect even during periods when wind power production is low” (Aarhus Municipality, 2012, p. 14). As these effects are increased through the introduction of more wind turbines in Denmark, the earnings of conventional thermal power plants begin to diminish. The decreasing earnings in the Spot Market makes it less attractive to construct conventional power plants designed for delivering large amounts of electricity during long fixed periods of time. Part of this effect is also due to how ramping these technologies up and down requires relatively long periods of time and considerable expense, which in turn disqualifies them from being active in the markets temporally closest to dispatch. Renewable energy integration in this way also becomes a matter of ensuring investment in capacity which is available in periods with little or no wind, in spite of the decreased earnings associated with an increase in the proportion of electricity supply generated by wind turbines (e.g. Boldt, 2013).

In showing how solving the intermittency problem has been approached as a process of market construction, establishing the fact that wind power integration has become a matter of electricity valuation is a central step. As the main signal of the homeostatic control device for electricity system equilibrium maintenance, the way the prices of Nord Pool are made to work comes to be of great importance when wanting to understand how fluctuating electricity generation from wind turbines is handled. Wind power integration by means of electricity liquidization depends on it. Following the mobilization of liquidity as a measure provided by economics helping to describe an intended outcome of market infrastructure reconfiguration increasing the means by which homeostatic utility control can be exerted here implies a focus on the Danish transmission system. Importantly, it should be noted that in the main example taken up below, the concept of liquidity

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was operationalized by translating it into the notion of the ‘operational utility value’ of a specific transmission system interconnector.