Although variable renewable energy (VRE) technologies with zero marginal costs decrease electricity prices, the literature is inconclusive about how the resulting shift in the supply curves impacts price volatility. Because the flexibility to respond to high peak and low offpeak prices is crucial for demand-response applications and may compensate for the losses of conventional generators caused by lower average prices, there is a need to understand how the penetration of VRE affects volatility. In this paper, we build distributed lag models with Danish and German data to estimate the impact of VRE generation on electricity price volatility. We find that in Denmark wind power decreases the daily volatility of prices by flattening the hourly price profile, but in Germany it increases the volatility because it has a stronger impact on off-peak prices. Our analysis suggests that access to flexible generation capacity and wind power generation patterns contribute to these differing impacts. Meanwhile, solar power decreases price volatility in Germany. By contrast, the weekly volatility of prices increases in both areas due to the intermittency of VRE. Thus, policy measures for facilitating the integration of VRE should be tailored to such region-specific patterns.
To foster the transition to more sustainable energy systems, policymakers have been approving measures to improve energy efficiency as well as promoting smart grids. In this setting, building managers are encouraged to adapt their energy operations to real-time market and weather conditions. Yet, most fail to do so as they rely on conventional building energy management systems (BEMS) that have static temperature set points for heating and cooling equipment. In this paper, we investigate how effective policy measures are at improving building-level energy efficiency compared to a smart BEMS with dynamic temperature set points. To this end, we present an integrated optimisation model mimicking the smart BEMS that combines decisions on heating and cooling systems operations with decisions on energy sourcing. Using data from an Austrian and a Spanish building, we find that the smart BEMS results in greater reduction in energy consumption than a conventional BEMS with policy measures.
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