  Hydroelectric power (hydropower) is unique in that it can function as both a
conventional source of electricity and as backup storage (pumped hydroelectric
storage) for providing energy in times of high demand on the grid. This study
examines the impact of hydropower on system electricity price and price
volatility in the region served by the New England Independent System Operator
(ISONE) from 2014 - 2020. We perform a robust holistic analysis of the mean and
quantile effects, as well as the marginal contributing effects of hydropower in
the presence of solar and wind resources. First, the price data is adjusted for
deterministic temporal trends, correcting for seasonal, weekend, and diurnal
effects that may obscure actual representative trends in the data. Using
multiple linear regression and quantile regression, we observe that hydropower
contributes to a reduction in the system electricity price and price
volatility. While hydropower has a weak impact on decreasing price and
volatility at the mean, it has greater impact at extreme quantiles (> 70th
percentile). At these higher percentiles, we find that hydropower provides a
stabilizing effect on price volatility in the presence of volatile resources
such as wind. We conclude with a discussion of the observed relationship
between hydropower and system electricity price and volatility.
