The Impact of the North Atlantic Oscillation on Electricity Markets: A case study on Ireland

July 19, 2016 | Journal Article

Front cover of Energy Economics journal Authors: John Curtis , Muireann Á Lynch , Laura Zubiate
Energy Economics , Vol. 58 , August, 2016 , pp. 186-198

The North Atlantic Oscillation (NAO) is a large-scale atmospheric circulation pattern driving climate variability in north-western Europe. As the deployment of wind-powered generation expands on electricity networks across Europe, the impacts of the NAO on the electricity system will be amplified. This study assesses the impact of the NAO, via wind-power generation, on the electricity market considering thermal generation costs, wholesale electricity prices and wind generation subsidies. A Monte Carlo approach is used to model NAO phases and generate hourly wind speed time-series data, electricity demand and fuel input data. A least-cost unit commitment and economic dispatch model is used to simulate an island electricity system, modelled on the all-island Irish electricity system. The impact of the NAO obviously depends on the level of wind capacity within an electricity system. Our results indicate that on average a switch from negative to positive NAO phase can reduce thermal generation costs by up to 8%, reduce wholesale electricity prices by as much as €1.5/MWh, and increase wind power generators’ revenue by 12%.

  • Publication Details

    Journal Article

    ESRI Series Number: 201635
    Research Area: Energy and Environment
    Date of Publication: July 19, 2016
    Published Online: July 19, 2016
    Publisher: Elsevier
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