Networks and Spatial Economics

, Volume 12, Issue 3, pp 377–401 | Cite as

Combining Energy Networks



Electricity markets depend on upstream energy markets to supply the fuels needed for generation. Since these markets rely on networks, congestion in one can quickly produce changes in another. In this paper we develop a combined partial equilibrium market model which includes the interactions of natural gas and electricity networks. We apply the model to a stylized representation of Europe’s electricity and natural gas markets to illustrate the upstream and downstream feedback effects which are not obvious on first sight. We find that both congestion and loop-flow effects in electricity markets impact prices and quantities in markets located far from the initial cause of the market changes.


Electricity network Natural gas network Europe MCP 



We thank Christian von Hirschhausen, Sophia Rüster, and participants of the YEEES meeting April 2010 in Cambridge, UK, and the editor and referees for their comments and suggestions.


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© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Dresden University of Technology, Faculty of Business and Economics, Chair of Energy Economics and Public Sector ManagementDresdenGermany

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