Netting of capacity in interconnector auctions
AbstractScarce interconnector capacities are a severe obstacle to transregional competition and a unified market for electricity in the European Union. However, physically the interconnectors are rarely used up to capacity. This is due to the fact that the current allocation schemes make only limited use of the fact that currents in opposing directions cancel out. We propose a "netting" auction mechanism which makes use of this and in which even small transmission capacities can generate large competitive pressure in adjacent markets. Netting increases the usage of capacity and reduces the auctioneer's incentive to withhold capacity from the auction.
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Bibliographic InfoPaper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2006_5.
Length: 35 pages
Date of creation: Mar 2006
Date of revision:
Divisible good auctions; interconnector; electricity marktes; competition policy;
Find related papers by JEL classification:
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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- Hendrik Hakenes & Isabel Schnabel, 2006.
"The Threat of Capital Drain: A Rationale for Public Banks?,"
Working Paper Series of the Max Planck Institute for Research on Collective Goods
2006_11, Max Planck Institute for Research on Collective Goods.
- Hakenes, Hendrik & Schnabel, Isabel, 2006. "The Threat of Capital Drain: A Rationale for Public Banks?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 107, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Derek Bunn & Georg Zachmann, 2010. "Inefficient arbitrage in inter-regional electricity transmission," Journal of Regulatory Economics, Springer, Springer, vol. 37(3), pages 243-265, June.
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