Advertisement

Economia Politica

, Volume 36, Issue 2, pp 527–548 | Cite as

Market coupling between electricity markets: theory and empirical evidence for the Italian–Slovenian interconnection

  • Lucia ParisioEmail author
  • Matteo Pelagatti
Article
  • 41 Downloads

Abstract

Since January 1, 2011 the electricity exchanges of Italy and Slovenia are working under a mechanism of market coupling for their respective day-ahead sessions. Similar mechanisms are being implemented in many European countries to foster the integration of power markets that eventually will merge into one large European exchange. This paper is one of the first works in which, by analyzing market results, we try and assess the degree of integration of the Italian and Slovenian electricity markets due to the market coupling policy. Empirical results are useful to evaluate the success of the EU Price Coupling of Regions policy and suggest further enhancements.

Keywords

Electricity markets Market coupling Cointegration Robustness 

JEL Classification

L94 C22 C32 

References

  1. Bosco, B., Parisio, L., Pelagatti, M., & Baldi, F. (2010). Long run relations in European electricity prices. Journal of Applied Econometrics, 25(5), 805–832.CrossRefGoogle Scholar
  2. Chao, H. P., & Peck, S. (1996). A market mechanism for electric power transmission. Journal of Regulatory Economics, 10(1), 25–59.CrossRefGoogle Scholar
  3. Creti, A., Fumagalli, E., & Fumagalli, E. (2010). Integration of electricity markets in europe: Relevant issues for italy. Energy Policy, 38(11), 6966–6976.CrossRefGoogle Scholar
  4. De Vany, A., & Walls, W. (1999). Cointegration analysis of spot electricity prices: Insights on transmission efficiency in the western US. Energy Economics, 21(5), 435–448.CrossRefGoogle Scholar
  5. Ehrenmann, A., & Smeers, Y. (2005). Inefficiencies in european congestion management proposals. Utilities Policy, 13(2), 135–152.CrossRefGoogle Scholar
  6. Gianfreda, A., Parisio, L., & Pelagatti, M. (2016a). The impact of RES in the Italian day-ahead and balancing markets. The Energy Journal, 37, SI2.Google Scholar
  7. Gianfreda, A., Parisio, L., & Pelagatti, M. (2016b). Revisiting long-run relations in power markets with high RES penetration. Energy Policy, 94, 432–445.CrossRefGoogle Scholar
  8. Glachant, J. M. (2010). The achievement of the EU electricity internal market through market coupling. EUI Working Papers RSCAS/87Google Scholar
  9. Hastie, T., Tibshirani, R., & Friedman, J. (2009). The elements of statistical learning (2nd ed.). Berlin: Springer.CrossRefGoogle Scholar
  10. Keppler, J. H., Phan, S., & Le Pen, Y. (2016). The impacts of variable renewable production and market coupling on the convergence of French and German electricity prices. The Energy Journal, 37(3), 343–359.Google Scholar
  11. Kiesel, R., & Kusterman, M. (2016). Structural models for coupled electricity markets. Journal of Commodity Markets, 3(1), 16–38.CrossRefGoogle Scholar
  12. Koban, V. (2017). The impact of market coupling on hungarian and romanian electricity markets: Evidence from the regime-switching model. Energy and Environment, 28(5–6), 621–638.CrossRefGoogle Scholar
  13. Kwiatkowski, D., Phillips, P. C. B., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root: How sure are we that economic time series have a unit root? Journal of Econometrics, 54(1–3), 159–178.CrossRefGoogle Scholar
  14. Lange, K. L., Little, J. A., & Taylor, J. M. G. (1989). Robust statistical modeling using the \(t\) distribution. Journal of the American Statistical Association, 84, 881–896.Google Scholar
  15. Lucas, A. (1997). Cointegration testing using pseudolikelihood ratio tests. Econometric Theory, 13, 149–169.CrossRefGoogle Scholar
  16. Ochoa, C., & van Ackere, A. (2015). Winners and losers of market coupling. Energy, 80, 522–534.CrossRefGoogle Scholar
  17. Parisio, L., & Bosco, B. (2008). Electricity prices and cross-border trade: Volume and strategy effects. Energy Economics, 30(4), 1760–1775.CrossRefGoogle Scholar
  18. Pelagatti, M. M., & Sen, P. K. (2013). Rank tests for short memory stationarity. Journal of Econometrics, 172(1), 90–105.CrossRefGoogle Scholar
  19. Swensen, A. R. (2006). Bootstrap algorithms for testing and determining the cointegration rank in VAR models. Econometrica, 74, 1699–1714.CrossRefGoogle Scholar
  20. Tibshirani, R. (1996). Regression shrinkage and selection via the lasso. Journal of the Royal Statistical Society Series B (Methodological), 58(1), 267–288.CrossRefGoogle Scholar
  21. Zachmann, G. (2008). Electricity wholesale market prices in Europe: Convergence? Energy Economics, 30(4), 1659–1671.CrossRefGoogle Scholar
  22. Zani, A., Benini, M., Gelmini, A., Migliavacca, G., & Siface, D. (2012). Assessment of the impact on the Italian electricity market of a price coupling with neighbouring countries. In IFAC Proceedings of 8th power plant and power system control symposium (Vol. 45, No. 21, pp. 687 – 692)Google Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.DEMSUniversity of Milan-BicoccaMilanItaly

Personalised recommendations