Abstract
We empirically investigate the effect of RES generation on the Italian spot and regulation prices by examining price dynamics from 2012 to 2014 in day-ahead, intra-daily and balancing market sessions. Intra-day sessions are particularly valuable for intermittent generators willing to adjust their production programs as better weather forecasts become available. We model the relationships among spot, adjustment and regulation prices and provide empirical evidence that the intra-daily sessions are well-functioning and low-cost market tools to ease the introduction of a high share of RES. Conventional production units may bid on all market sessions but we estimate high and significant premia of readiness earned on real-time sessions. Further, we evaluate the relationship among price differences, observed between regulation and spot markets and the amount of wind, solar, hydro, and geothermal production in all Italian zones, generally finding a positive and significant effect on premia.