The Influence of Temperature on Spike Probability in Day-Ahead Power Prices
It is well known that day-ahead prices in power markets exhibit spikes. These spikes are sudden increases in the day-ahead price that occur because power production is not flexible enough to respond to demand and/or supply shocks in the short term. This paper focuses on how temperature influences the probability on a spike. The paper shows that the difference between the actual and expected temperature significantly influences the probability on a spike and that the impact of temperature on spike probability depends on the season.
|Keywords||Day-ahead power price, Power production, Spike probability, Temperature|
|JEL||Corporate Finance and Governance (jel G3), Business Administration and Business Economics; Marketing; Accounting (jel M), Transport, International and Domestic Trade, Energy, Technology, and Other Services (jel N7)|
|Publisher||Erasmus Research Institute of Management|
|Series||ERIM Report Series Research in Management|
|Journal||ERIM report series research in management Erasmus Research Institute of Management|
Huisman, R. (2007). The Influence of Temperature on Spike Probability in Day-Ahead Power Prices (No. ERS-2007-039-F&A). ERIM report series research in management Erasmus Research Institute of Management. Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/10179