Abstract:
This study examined the cross-regional impacts of renewable power generation in Tohoku on the electricity spot market
in Tokyo. We use the hourly supply data of renewable power generation, cross-regional transmitted electricity, and
transaction data in the electricity spot market to investigate how renewable power generated in a neigh- boring area affects
the local spot price and market volatility. Our results indicate that the electricity spot market is affected not only by local
renewable power generation, but also by renewable power generation in neighboring areas. The relatively higher price
reduction effect of transmitted power is due to its higher price elasticity under a tight supply-demand balance. Specifically,
our results confirm the cross-regional price stabilization impact of renewable power generation in Tohoku. The negative
impact on realized volatility is due to the relatively more stable renewable electricity supply from Tohoku. Furthermore,
we find that renewable power producers, especially solar power producers, are not incentivized by the fixed-price Feed-
in Tariff to meet electricity demand during peak hours because of higher marginal costs.