A plant-level analysis of the spill-over effects of the German Energiewende

In order to analyse international effects of national energy policies, we investigate the spill-over effects of the German Energiewende on the Dutch power market, which is closely connected to the German market. We estimate the impact of the German supply of wind and solar electricity on the Dutch day-ahead price of electricity and the utilisation of the conventional power plants. We take cross-border capacity constraints into account and use hourly plant-level data over 2006-2014. We find that the price elasticity of German wind on Dutch day-ahead prices is -0.03. However, this effect vanishes when the cross border capacity is fully utilised. We find a modest negative impact on the utilisation of the Dutch,power plants. As such, we conclude that the German Energiewende has had modest spill-over effects to the Dutch market. The recent dramatic performance of the Dutch gas-fired plants can be attributed to the changes in the relative prices of coal versus natural gas. We conclude that national energy policies in one country do not necessarily strongly affect neighbouring markets in case of constrained cross border capacities. (C) 2016 The Authors. Published by Elsevier Ltd.