Natural Gas–Electricity Price Linkage Analysis Method Based on Benefit–Cost and Attention–VECM Model

Zhou, Sheng; Gan, Wen Qi; Liu, Ang; Jiang, Xinyue; Shen, Chengliang; Wang, Yunchu; Yang, Li; Liu, Shengyuan

doi:10.3390/en16104155

Cited by 3 publications

(1 citation statement)

References 20 publications

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“…According to the result, the price of electricity is explained by the development of natural gas. Due to the recent geopolitical turbulences, Zhou et al [39] examined the linkage between gas and electricity prices. Their results revealed the co-integration relationship of long-term gas and electricity price stability.…”

Section: State Of the Artmentioning

confidence: 99%

The Nexus between Wholesale Electricity Prices and the Share of Electricity Production from Renewables: An Analysis with and without the Impact of Time of Distress

Herczeg,

Pintér

2024

Energies

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The continuous integration of renewable energy sources into the EU’s energy mix is reshaping the electricity market dynamics mainly due to the merit order mechanism affecting wholesale electricity prices (WHEP). This article aims to review the wholesale electricity market mechanism, identify the key factors affecting WHEP, and assess the extent of their contributions under different circumstances. Time series datasets, consisting of monthly observations of commodity prices and energy data regarding 25 EU members over the time horizons January 2015–December 2020 (pre-crisis) and January 2015–August 2023 (co-crisis), are used to support the theory, perform the comparison, and verify the validity of our hypotheses with the use of correlation and multiple linear regression analyses. Our empirical results show that in both cases, a 1% increase in the share of renewable electricity generation (RES) from one period to the next is ceteris paribus associated with an average of approx. 0.96% decrease in WHEP for the same period. However, extreme natural gas prices during times of distress significantly increase WHEP due to the merit order mechanism, from an average of 0.19% to 0.55%. This novel approach provides deeper insights into the interconnectedness of WHEP and the energy and environmental commodity prices and RES during changing economic and geopolitical circumstances, primarily highlighting the influencing factor of RES in WHEP developments.

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Section: State Of the Artmentioning

confidence: 99%

The Nexus between Wholesale Electricity Prices and the Share of Electricity Production from Renewables: An Analysis with and without the Impact of Time of Distress

Herczeg,

Pintér

2024

Energies

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Directional connectedness between the electricity prices and natural gas prices: evidence from Alberta’s electricity market

Oviedo-Gómez,

Londoño-Hernández,

Manotas-Duque

2024

SEF

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Purpose This study aims to assess volatility spillovers and directional connectedness between electricity (EPs) and natural gas prices (GPs) in the Canadian electricity market, based on a hydrothermal power generation market strongly dependent on exogenous variables such as fossil fuel prices and climatology factors. Design/methodology/approach The methodology is divided into two stages. First, a quantile vector autoregression model is used to evaluate the direction and magnitude of the influence between natural gas and electricity prices through different quantiles of their distributions. Second, a cross-quantilogram is estimated to measure the directional predictability between these prices. The data set consists of daily electricity and natural gas prices between January 2015 and December 2023. Findings The main finding shows that electricity prices are pure shock receivers of volatility from natural gas prices for the different quantiles. In this way, natural gas price fluctuations explain 0.20%, 0.98% and 22.72% of electricity price volatility for the 10th, 50th and 90th quantiles, respectively. On the other hand, a significant and positive correlation is observed in the high quantiles of the electricity prices for any natural gas price value. Originality/value The study described the risk to the electricity market caused by nonrenewable source price fluctuations and provided evidence for designing regulatory policies to reduce its exposure in Alberta, Canada. It also allows us to understand the importance of natural gas in the energy transition process and define it as the fundamental determinant of the electricity market dynamic.

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Research on Economic Evaluation Methods and Project Investment Strategies for Gas Power Generation Based on the Natural Gas Industry Chain and Gas–Electricity Price Linkage in China

Wei,

Li,

Hong

et al. 2024

Fuels

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In recent years, due to the spike in natural gas spot prices, gas-fired power corporations’ operating costs have skyrocketed. Traditional power generation corporations have gradually been withdrawing from gas power generation investment, replaced by oil and gas enterprises with upstream resources. The development of gas-fired power plants helps to maintain the stability of the power grid and has a positive effect on the realization of carbon neutrality goals. At present, most of the financial evaluation methods for gas power generation projects tend to focus on the static tariffs of the project itself and lack consideration for the overall contribution to the industry chain and the latest “gas–electricity price linkage” mechanisms in China, leading to oil and gas enterprises reducing investment in gas-fired power plants due to yield constraints. In this paper, a financial evaluation methodology for gas power generation projects based on the industrial chain and the “gas–electricity price linkage” mechanism was proposed. The investment return characteristics of specific gas power generation projects under the “gas–electricity price linkage” mechanism in different provinces were revealed through this methodology. Considering the characteristics and industrial development trends in major provinces in China, investment and operation strategies for gas power generation were proposed. These studies provide oil and gas enterprises with references and suggestions for future investment decisions for new gas power generation projects.

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Natural Gas–Electricity Price Linkage Analysis Method Based on Benefit–Cost and Attention–VECM Model

Cited by 3 publications

References 20 publications

The Nexus between Wholesale Electricity Prices and the Share of Electricity Production from Renewables: An Analysis with and without the Impact of Time of Distress

The Nexus between Wholesale Electricity Prices and the Share of Electricity Production from Renewables: An Analysis with and without the Impact of Time of Distress

Directional connectedness between the electricity prices and natural gas prices: evidence from Alberta’s electricity market

Research on Economic Evaluation Methods and Project Investment Strategies for Gas Power Generation Based on the Natural Gas Industry Chain and Gas–Electricity Price Linkage in China

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