Modelling German electricity wholesale spot prices with a parsimonious fundamental model – Validation & application.

In this paper, we introduce a parsimonious fundamental model for the German day-ahead market. The methodology approximates the supply stack by a piecewise linear function and considers fundamental information, e.g. power plant availabilities, must-run production and cross-border exchange. We reduce complexity by considering technology classes, uncoupled time periods and only one market area. The model accurately reproduces the hourly historical prices and electricity production volumes for most thermal production units in Germany. In a case study, we investigate the effects of the German nuclear phase-out decision. We find an additional price decrease and reduced electricity imports in the counterfactual scenario. • A parsimonious fundamental model with reduced complexity is introduced. • The Model is validated for the German day-ahead market for the years 2011-2015. • The model accurately reproduces German day-ahead spot prices and production volumes. • Case study: German nuclear phase-out decision led to higher prices. • Fossil fired production and additional imports have substituted nuclear production. [ABSTRACT FROM AUTHOR]