Exploring the economic impacts of electricity price volatility on wind energy capture rates in the Nordic Region

Abstract

This paper examines the economic impacts of electricity price volatility on wind energy capture rates in the Nordic countries—Denmark, Finland, Norway, and Sweden—using data from the Nord Pool between 2020 and 2024. It investigates how price volatility affects the profitability of wind energy projects, focusing on two key metrics: capture price (the average price received for electricity generated by a wind farm) and capture rate (the ratio of revenue earned by renewable energy generators to the market price of electricity). Capture price reflects revenue per unit of electricity produced, while capture rate indicates wind energy's competitiveness in the market. As wind energy penetration increases, capture rates tend to decrease due to market saturation. Countries with advanced grid infrastructure and supportive policies, such as Denmark and Norway, show higher capture rates, while regions like Sweden and Finland, with less integrated infrastructure, face economic challenges. Effective grid management, better storage solutions, and supportive regulations are crucial for optimizing wind energy’s economic performance in the region. The study also provides insights for policymakers, investors, and stakeholders, emphasizing the need for strategic investments in infrastructure and regulation.