The Impact of Wind Power Generation on Wholesale Electricity Price at Peak Time Demand in Korea

Seunghyun Ryu, Shinyoung Um, and Suduk Kim

Abstract In this paper, wind power is analyzed to see its impact on wholesale electricity price or SMP (System Marginal Price) at peak time under the consideration of the stochastic characteristics of its power generation. For this purpose, future power supply curve is estimated considering future fuel price for power and the construction and decommission of power plant's plan. Future oil price is assumed to follow EIA's future oil price scenario and the relation between oil price and LNG price for power generation are examined to forecast LNG price for power generation. Information on future power plant's construction and decommission plan and power demand at peak time is used based on the 4th National Power Market Plan. Once future SMP is estimated using future power supply curve with the peak time demand, the stochastic characteristics of wind power generations is considered to see its impact on the changes in SMP. The result shows that SMP without wind power is estimated to be $ 0.1568 per KWh, while it is shown to drop down to $ 0.1501 per KWh, a 4.27% decrease with wind power on 2030.

Keywords SMP (System Marginal Price) • CBP (Cost Based Pool) • Wind • Merit-order effect • Renewable energy

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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