Electricity Market Coupling in Europe: Status Quo and Future Challenges

Item Type Book Section
Abstract

In electricity markets globally, market participants and policymakers increasingly focus on integrating adjacent, yet separate market areas via cross-border trade in electricity. Based on a discussion of the institutional framework for organizing cross-border trade, this chapter analyzes how spot and futures prices for wholesale electricity are affected by different degrees of market integration. We first contrast the two main mechanisms to allocate transmission capacity between neighboring markets: explicit and implicit auctions. Subsequently, we study the impact of these allocation schemes on the empirical price dynamics of major electricity markets in Europe. Our empirical analysis thereby confirms that under market coupling, economically inefficient cross-border flows in the wrong direction can be avoided. From a policy point of view, however, we show that further market integration can be hindered by individual energy market regulation on a national level, which may be opposed to supra-national frameworks such as market coupling.

Authors Mahringer, Steffen; Füss, Roland & Prokopczuk, Marcel
Editors Goutte, Stéphane & Nguyen, Duc Khuong
Language English
Keywords Energy Market Coupling, Electricity Market Reforms, Explicit and Implicit Auction, Price Convergence
Subjects business studies
economics
finance
HSG Classification contribution to scientific community
HSG Profile Area SOF - System-wide Risk in the Financial System
Refereed No
Date March 2020
Publisher World Scientific
Page Range 93-120
Number of Pages 28
Title of Book Handbook of Energy Finance
Publisher DOI https://doi.org/10.1142/9789813278387_0005
Official URL https://www.worldscientific.com/doi/10.1142/978981...
Contact Email Address roland.fuess@unisg.ch
Depositing User Prof. Dr. Roland Füss
Date Deposited 16 Jul 2015 09:56
Last Modified 18 Feb 2021 15:49
URI: https://www.alexandria.unisg.ch/publications/242508

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Citation

Mahringer, Steffen; Füss, Roland & Prokopczuk, Marcel: Electricity Market Coupling in Europe: Status Quo and Future Challenges. In Goutte, Stéphane & Nguyen, Duc Khuong (ed.): Handbook of Energy Finance. World Scientific, 2020, S. 93-120.

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https://www.alexandria.unisg.ch/id/eprint/242508
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