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Decoding Restricted Participation in Sequential Electricity Markets

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  • Knaut, Andreas

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Paschmann, Martin

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

Abstract

Restricted participation in sequential markets may cause high price volatility and welfare losses. In this paper we therefore analyze the drivers of restricted participation in the German intraday auction which is a short-term electricity market with quarter-hourly products. Applying a fundamental electricity market model with 15-minute temporal resolution, we identify the lack of sub-hourly market coupling being the most relevant driver of restricted participation. We derive a proxy for price volatility and find that full market coupling may trigger quarter-hourly price volatility to decrease by a factor close to four.

Suggested Citation

  • Knaut, Andreas & Paschmann, Martin, 2017. "Decoding Restricted Participation in Sequential Electricity Markets," EWI Working Papers 2017-5, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 31 Aug 2017.
    • Handle: RePEc:ris:ewikln:2017_005
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    References listed on IDEAS

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    Cited by:

    1. Paschmann, Martin, 2017. "Economic Analysis of Price Premiums in the Presence of Non-convexities - Evidence from German Electricity Markets," EWI Working Papers 2017-12, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    2. Brändle, Gregor & Schönfisch, Max & Schulte, Simon, 2020. "Estimating Long-Term Global Supply Costs for Low-Carbon Hydrogen," EWI Working Papers 2020-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 10 Aug 2021.
    3. Çam, Eren, 2020. "Optimal Dispatch of a Coal-Fired Power Plant with Integrated Thermal Energy Storage," EWI Working Papers 2020-5, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 10 Aug 2021.
    4. Knaut, Andreas & Paschmann, Martin, 2019. "Price volatility in commodity markets with restricted participation," Energy Economics, Elsevier, vol. 81(C), pages 37-51.
    5. Obermüller, Frank, 2017. "Explaining Electricity Forward Premiums - Evidence for the Weather Uncertainty Effect," EWI Working Papers 2017-10, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    6. Koolen, Derck & Huisman, Ronald & Ketter, Wolfgang, 2022. "Decision strategies in sequential power markets with renewable energy," Energy Policy, Elsevier, vol. 167(C).

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    More about this item

    Keywords

    Sequential Electricity Markets; Short-term Market Dynamics; Electricity Market Interaction; Short-term Price Formation; Restricted Market Participation; Price Volatility;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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