Wind Generators and Market Power: Does It Matter Who Owns Them?

Nihat Misir

Research output: Contribution to conferencePaperResearchpeer-review


Electricity production from wind generators holds significant importance in European Union’s 20% renewable energy target by 2020. In this paper, I show that ownership of
wind generators affects market outcomes by using both a Cournot oligopoly model and a
real options model. In the Cournot oligopoly model, ownership of the wind generators by
owners of fossil-fueled (peakload) generators decreases total peakload production and increases the market price. These effects increase with total wind generation and aggregate
wind generator ownership. In the real options model, start up and shut down price thresholds are significantly higher when the monopolist at the peakload level owns both types of generators. Furthermore, when producing electricity with the peakload generator, the monopolist can avoid facing prices below marginal cost by owning a certain share of the wind generators.
Original languageEnglish
Publication date2013
Number of pages26
Publication statusPublished - 2013
EventThe 17th Annual International Real Options Conference 2013 - University of Tokyo, Tokyo, Japan
Duration: 25 Jul 201326 Jul 2013
Conference number: 17


ConferenceThe 17th Annual International Real Options Conference 2013
LocationUniversity of Tokyo
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