The Covid-19 shock on a low-carbon grid: Evidence from the nordics

Abstract

I investigate how the Covid-19 epidemic affected consumption and prices in a part of the Nordic electricity market that has a high penetration of intermittent renewable energy: Denmark and the southernmost part of Sweden. In sharp contrast to studies of other regions, I find no overall drop in consumption in this region. However, the distribution of consumption shifted away from peak hours. Nonetheless, prices dropped significantly, with a decline that started well before the imposition of societal restrictions in Denmark. Periods where wind power covered all of local load saw prices collapse towards zero with little variance under the Covid-19 epidemic. The results have important policy implications. Energy-only markets may fail to provide sufficient investment incentives for renewable energy when penetrations of such generation are already high. Policies and technologies that shift load from peak to non-peak times may further erode market incentives.

Impact of the COVID-19 Pandemic to the Sustainability of the Energy Sector

“…The results of the analysis of electricity consumption in Nordic countries differs. According to the Mauritzen [107], there was no decrease in energy consumption in Denmark and Sweden, although the peak hours changed. Significant reductions in energy prices have also been observed, but they started even before the COVID-19 restrictions were implemented.…”

Refined Urban Grid Simulation Planning Based on Low Carbon Goal Achievement

“…Therefore, how to reduce CO2 emissions, slow down the greenhouse effect, and ensure sustainable energy supply has become a consensus among countries around the world [7][8]. The optimal compromise between low carbon and economy can be achieved by considering both carbon trading and demand response in the process of optimal allocation of microgrids [9]. The introduction of carbon trading will change the traditional economy-oriented planning mode, which can fully consider the low-carbon nature of the system, and the introduction of demand response on the basis of carbon trading can, on the one hand, improve the utilization rate of renewable energy by users, and on the other hand, it can reduce the configuration capacity of the energy storage device, and improve the economy of the system [10][11][12].…”