Inference of electricity price depletion by wind power in Spain

Wind power is usually given priority in electricity markets by assigning a zero price to its expected output during the settlement process. The more wind power is to be incorporated into the market, the less number of conventional units of output will be required to supply the demand, resulting in an expected drop in electricity prices. Lower electricity prices are good in the long-term for all entities that buy electricity from the market and sell it back to consumers. When the prices drop to minimum levels, however, (a situation called here as price depletion) the profitability of some conventional generators necessary for the supply adequacy of the system in times of low wind power production may get compromised. This work uses a probabilistic model to estimate the role that wind power is playing in the price depletion situations sometimes observed in Spain. Evidence shows that it is a balanced combination of factors what leads to this circumstance.