[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v48y2012icp322-333.html
   My bibliography  Save this article

Measuring the impact of market coupling on the Italian electricity market

Author

Listed:
  • Pellini, Elisabetta
Abstract
This paper evaluates the impact on the Italian electricity market of replacing the current explicit auction mechanism with market coupling. Maximising the use of the cross-border interconnection capacity, market coupling increases the level of market integration and facilitates the access to low-cost generation by consumers located in high-cost generation countries. Thus, it is expected that a high-priced area such as Italy could greatly benefit from the introduction of this mechanism. In this paper, the welfare benefits are estimated for 2012 under alternative market scenarios, employing the optimal dispatch model ELFO++. The results of the simulations suggest that the improvement in social surplus is likely to be significant, especially when market fundamentals are tight.

Suggested Citation

  • Pellini, Elisabetta, 2012. "Measuring the impact of market coupling on the Italian electricity market," Energy Policy, Elsevier, vol. 48(C), pages 322-333.
  • Handle: RePEc:eee:enepol:v:48:y:2012:i:c:p:322-333
    DOI: 10.1016/j.enpol.2012.05.029
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421512004417
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.enpol.2012.05.029?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Parisio, Lucia & Bosco, Bruno, 2008. "Electricity prices and cross-border trade: Volume and strategy effects," Energy Economics, Elsevier, vol. 30(4), pages 1760-1775, July.
    2. D. Finon & E. Romano, 2009. "Electricity market integration: Redistribution effect versus resource reallocation," Post-Print hal-00716343, HAL.
    3. Kristiansen, Tarjei, 2007. "An assessment of the Danish-German cross-border auctions," Energy Policy, Elsevier, vol. 35(6), pages 3369-3382, June.
    4. Malaguzzi Valeri, Laura, 2009. "Welfare and competition effects of electricity interconnection between Ireland and Great Britain," Energy Policy, Elsevier, vol. 37(11), pages 4679-4688, November.
    5. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-242, September.
    6. Benjamin F. Hobbs & Fieke A.M. Rijkers & Maroeska G. Boots, 2005. "The More Cooperation, The More Competition? A Cournot Analysis of the Benefits of Electric Market Coupling," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 69-98.
    7. Karsten Neuhoff, 2003. "Integrating Transmission and Energy Markets Mitigates Market Power," Working Papers EP17, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    8. Derek Bunn & Georg Zachmann, 2010. "Inefficient arbitrage in inter-regional electricity transmission," Journal of Regulatory Economics, Springer, vol. 37(3), pages 243-265, June.
    9. Meeus, Leonardo, 2011. "Implicit auctioning on the Kontek Cable: Third time lucky?," Energy Economics, Elsevier, vol. 33(3), pages 413-418, May.
    10. Severin Borenstein & James. Bushnell & Steven Stoft, 2000. "The Competitive Effects of Transmission Capacity in A Deregulated Electricity Industry," RAND Journal of Economics, The RAND Corporation, vol. 31(2), pages 294-325, Summer.
    11. Elisabetta Pellini, 2011. "Measuring the impact of market coupling on the Italian electricity market using ELFO++," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 133, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    12. Federico Boffa & Carlo Scarpa, 2009. "An Anticompetitive Effect of Eliminating Transport Barriers in Network Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(2), pages 115-133, March.
    13. Domanico, Fabio, 2007. "Concentration in the European electricity industry: The internal market as solution?," Energy Policy, Elsevier, vol. 35(10), pages 5064-5076, October.
    14. David Newbery & Tanga McDaniel, 2002. "Auctions and trading in energy markets - an economic analysis," Working Papers EP15, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    15. Andreas Ehrenmann & Karsten Neuhoff, 2009. "A Comparison of Electricity Market Designs in Networks," Operations Research, INFORMS, vol. 57(2), pages 274-286, April.
    16. Chao, Hung-Po & Peck, Stephen, 1996. "A Market Mechanism for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 10(1), pages 25-59, July.
    17. Felix Hoffler & Tobias Wittmann, 2007. "Netting of Capacity in Interconnector Auctions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 113-144.
    18. Creti, Anna & Fumagalli, Eileen & Fumagalli, Elena, 2010. "Integration of electricity markets in Europe: Relevant issues for Italy," Energy Policy, Elsevier, vol. 38(11), pages 6966-6976, November.
    19. Richard Gilbert & Karsten Neuhoff & David Newbery, 2004. "Allocating Transmission to Mitigate Market Power in Electricity Markets," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 691-709, Winter.
    20. Finon, Dominique & Romano, Elliot, 2009. "Electricity market integration: Redistribution effect versus resource reallocation," Energy Policy, Elsevier, vol. 37(8), pages 2977-2985, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jan Horst Keppler, Sebastien Phan, and Yannick Le Pen, 2016. "The Impacts of Variable Renewable Production and Market Coupling on the Convergence of French and German Electricity Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    2. Hellwig, Michael & Schober, Dominik & Woll, Oliver, 2020. "Measuring market integration and estimating policy impacts on the Swiss electricity market," Energy Economics, Elsevier, vol. 86(C).
    3. repec:dau:papers:123456789/14119 is not listed on IDEAS
    4. Haxhimusa, Adhurim, 2018. "The Effects of German Wind and Solar Electricity on French Spot Price Volatility: An Empirical Investigation," Department of Economics Working Paper Series 258, WU Vienna University of Economics and Business.
    5. Barbour, Edward & Wilson, I.A. Grant & Radcliffe, Jonathan & Ding, Yulong & Li, Yongliang, 2016. "A review of pumped hydro energy storage development in significant international electricity markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 421-432.
    6. Jan Horst Keppler & Sébastien Phan & Yannick Le Pen & Charlotte Boureau, 2017. "The Impact of Intermittent Renewable Production and Market Coupling on the Convergence of French and German Electricity Prices," Working Papers hal-01599700, HAL.
    7. E. Ruben van Beesten & Daan Hulshof, 2022. "Economic incentives for capacity reductions on interconnectors in the day-ahead market," Papers 2210.07129, arXiv.org.
    8. Nikolaos Koltsaklis & Athanasios Dagoumas, 2018. "Policy Implications of Power Exchanges on Operational Scheduling: Evaluating EUPHEMIA’s Market Products in Case of Greece," Energies, MDPI, vol. 11(10), pages 1-26, October.
    9. van Beesten, E. Ruben & Hulshof, Daan, 2023. "Economic incentives for capacity reductions on interconnectors in the day-ahead market," Applied Energy, Elsevier, vol. 341(C).
    10. Jemma J. Makrygiorgou & Christos-Spyridon Karavas & Christos Dikaiakos & Ioannis P. Moraitis, 2023. "The Electricity Market in Greece: Current Status, Identified Challenges, and Arranged Reforms," Sustainability, MDPI, vol. 15(4), pages 1-40, February.
    11. Meyer, Roland & Gore, Olga, 2015. "Cross-border effects of capacity mechanisms: Do uncoordinated market design changes contradict the goals of the European market integration?," Energy Economics, Elsevier, vol. 51(C), pages 9-20.
    12. Fatras, Nicolas & Ma, Zheng & Duan, Hongbo & Jørgensen, Bo Nørregaard, 2022. "A systematic review of electricity market liberalisation and its alignment with industrial consumer participation: A comparison between the Nordics and China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    13. Luigi De Paoli & Elena Fumagalli, 2013. "Estimating welfare losses and gains in explicit auctions for power trade: an application to the Italian case," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2013(2), pages 153-181.
    14. Kiesel, Rüdiger & Kusterman, Michael, 2016. "Structural models for coupled electricity markets," Journal of Commodity Markets, Elsevier, vol. 3(1), pages 16-38.
    15. Vika Koban, 2017. "The impact of market coupling on Hungarian and Romanian electricity markets: Evidence from the regime-switching model," Energy & Environment, , vol. 28(5-6), pages 621-638, September.
    16. Pfeifer, Antun & Krajačić, Goran & Haas, Reinhard & Duić, Neven, 2020. "Consequences of different strategic decisions of market coupled zones on the development of energy systems based on coal and hydropower," Energy, Elsevier, vol. 210(C).
    17. Pierre, Erwan & Schneider, Lorenz, 2024. "Intermittently coupled electricity markets," Energy Economics, Elsevier, vol. 130(C).
    18. Valeria Di Cosmo & Sean Collins & Paul Deane, 2017. "The Effect of Increased Transmission and Storage in an Interconnected Europe: an Application to France and Ireland," ESP: Energy Scenarios and Policy 263159, Fondazione Eni Enrico Mattei (FEEM).
    19. Filippos Ioannidis & Kyriaki Kosmidou & Kostas Andriosopoulos & Antigoni Everkiadi, 2021. "Assessment of the Target Model Implementation in the Wholesale Electricity Market of Greece," Energies, MDPI, vol. 14(19), pages 1-22, October.
    20. Füss, Roland & Mahringer, Steffen & Prokopczuk, Marcel, 2013. "Electricity Spot and Derivatives Pricing when Markets are Interconnected," Working Papers on Finance 1323, University of St. Gallen, School of Finance.
    21. Figueiredo, Nuno Carvalho & Silva, Patrícia Pereira da & Cerqueira, Pedro A., 2015. "Evaluating the market splitting determinants: evidence from the Iberian spot electricity prices," Energy Policy, Elsevier, vol. 85(C), pages 218-234.
    22. Halužan, Marko & Verbič, Miroslav & Zorić, Jelena, 2022. "An integrated model for electricity market coupling simulations: Evidence from the European power market crossroad," Utilities Policy, Elsevier, vol. 79(C).
    23. Michele Fiorelli & Dogan Keles & Francesco Montana & Giovanni Lorenzo Restifo & Eleonora Riva Sanseverino & Gaetano Zizzo, 2020. "Evaluation of the Administrative Phase-Out of Coal Power Plants on the Italian Electricity Market," Energies, MDPI, vol. 13(18), pages 1-24, September.
    24. Gore, Olga & Vanadzina, Evgenia & Viljainen, Satu, 2016. "Linking the energy-only market and the energy-plus-capacity market," Utilities Policy, Elsevier, vol. 38(C), pages 52-61.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meeus, Leonardo, 2011. "Implicit auctioning on the Kontek Cable: Third time lucky?," Energy Economics, Elsevier, vol. 33(3), pages 413-418, May.
    2. Creti, Anna & Fumagalli, Eileen & Fumagalli, Elena, 2010. "Integration of electricity markets in Europe: Relevant issues for Italy," Energy Policy, Elsevier, vol. 38(11), pages 6966-6976, November.
    3. Luigi De Paoli & Elena Fumagalli, 2013. "Estimating welfare losses and gains in explicit auctions for power trade: an application to the Italian case," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2013(2), pages 153-181.
    4. Vika Koban, 2017. "The impact of market coupling on Hungarian and Romanian electricity markets: Evidence from the regime-switching model," Energy & Environment, , vol. 28(5-6), pages 621-638, September.
    5. Meeus, Leonardo, 2011. "Why (and how) to regulate power exchanges in the EU market integration context?," Energy Policy, Elsevier, vol. 39(3), pages 1470-1475, March.
    6. Kristiansen, Tarjei, 2007. "An assessment of the Danish-German cross-border auctions," Energy Policy, Elsevier, vol. 35(6), pages 3369-3382, June.
    7. Andreas Ehrenmann & Karsten Neuhoff, 2009. "A Comparison of Electricity Market Designs in Networks," Operations Research, INFORMS, vol. 57(2), pages 274-286, April.
    8. McInerney, Celine & Bunn, Derek, 2013. "Valuation anomalies for interconnector transmission rights," Energy Policy, Elsevier, vol. 55(C), pages 565-578.
    9. Gore, Olga & Vanadzina, Evgenia & Viljainen, Satu, 2016. "Linking the energy-only market and the energy-plus-capacity market," Utilities Policy, Elsevier, vol. 38(C), pages 52-61.
    10. Giuseppina Squicciarini & Guido Cervigni & Dmitri Perekhodtsev & Clara Poletti, 2010. "The integration of the European electricity markets at a turning point: from the regional model to the Third Legislative Package," RSCAS Working Papers 2010/56, European University Institute.
    11. Füss, Roland & Mahringer, Steffen & Prokopczuk, Marcel, 2013. "Electricity Spot and Derivatives Pricing when Markets are Interconnected," Working Papers on Finance 1323, University of St. Gallen, School of Finance.
    12. Neuhoff, Karsten & Barquin, Julian & Boots, Maroeska G. & Ehrenmann, Andreas & Hobbs, Benjamin F. & Rijkers, Fieke A.M. & Vazquez, Miguel, 2005. "Network-constrained Cournot models of liberalized electricity markets: the devil is in the details," Energy Economics, Elsevier, vol. 27(3), pages 495-525, May.
    13. Richard Green, 2007. "Nodal pricing of electricity: how much does it cost to get it wrong?," Journal of Regulatory Economics, Springer, vol. 31(2), pages 125-149, April.
    14. Kota Sugimoto, 2024. "Competitive effects of implicit auction on interconnectors: evidence from Japan," Journal of Regulatory Economics, Springer, vol. 66(1), pages 95-134, August.
    15. Holmberg, P. & Lazarczyk, E., 2012. "Congestion management in electricity networks: Nodal, zonal and discriminatory pricing," Cambridge Working Papers in Economics 1219, Faculty of Economics, University of Cambridge.
    16. Luis Olmos & Karsten Neuhoff, 2004. "Definition of a Balancing Point for Electricity Transmission Contracts," Working Papers EP40, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    17. Georg Gebhardt and Felix Hoffler, 2013. "How Competitive is Cross-border Trade of Electricity? Theory and Evidence from European Electricity Markets," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    18. Brunekreeft, Gert & Neuhoff, Karsten & Newbery, David, 2005. "Electricity transmission: An overview of the current debate," Utilities Policy, Elsevier, vol. 13(2), pages 73-93, June.
    19. Blázquez de Paz, Mario, 2018. "Electricity auctions in the presence of transmission constraints and transmission costs," Energy Economics, Elsevier, vol. 74(C), pages 605-627.
    20. Ruderer, Dominik & Zöttl, Gregor, 2018. "Transmission pricing and investment incentives," Utilities Policy, Elsevier, vol. 55(C), pages 14-30.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:48:y:2012:i:c:p:322-333. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.