Impact of variable renewable energy in the Iberian Electricity Market

Market and system operators face new challenges as more renewable energy sources are added. The driving factors in this trend are mainly associated with environmental benefits of the renewable generation and climate change mitigation, as well as the reduction of the dependency of conventional and external energy source. If integrated in large scale, the nondispatchable nature of intermittent resources imposes some technical and economic challenges on the operation of power systems. Particularly, market dynamics and prices could be influenced by such integrations. Over the last years, the generation mix of Spain and Portugal has undergone a dramatic change, driven by new environmental policies and financial incentives. In this regard, wind has become one of the most popular alternative sources of energy, bringing new challenges from the operational and structural point of view. This trend has gone hand in hand with integration of both markets into the Iberian Electricity Market in 2007. This paper presents a simple methodology based on linear regression and variance decomposition in order to quantify the impact of wind generation on specific segments of the Iberian Electricity Market (MIBEL).