Sammendrag
This chapter models long-term electricity forward prices with variables that influence the price of electricity. Long-term modelling requires consideration of expected changes in the demand and supply structure. The model combines highresolution information on fuel costs from financial markets and low-resolution information on the demand/supply structure of the electricity market. We model the latter using consumption and supply capacity, and the former with forward prices
of fuels, emission allowances and imported electricity. The model is estimated using
data from the Nordic electricity market and global long-term forward prices of
energy. Owing to a lack of data on consumption and supply capacity, the estimated
results only provide the broad influence of these variables on forward prices. Though
extrapolation of the prices observed in Nord Pool may suffer from the influence of
short-term variables, such as precipitation and temperature, the model yields robust
forecasts of the prices of contracts that are not exchange traded.
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