What Fuels the Volatility of Electricity Prices?

Lin, Jeremy; Saretto, Alessio; Shcherbakova, Anastasia

doi:10.24149/wp2408

Working Paper

What Fuels the Volatility of Electricity Prices?

Abstract: We use emergency outages of coal generators as an exogenous source of variation in the power generation stack to study how changes in marginal fuel affect real-time prices. Contrary to anecdotal evidence, we find that wholesale prices are less volatile when natural gas is on the margin more often.

Keywords: policy; spillovers; electricity; price volatility; Fuel; Environmental policy;

JEL Classification: Q41;

https://doi.org/10.24149/wp2408