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European power markets–A journey towards efficiency

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  • Morales, Lucía
  • Hanly, Jim

Abstract

The liberalization process of European electricity markets has been a work in progress since early reforms beginning in the 1990's. A key goal of these reforms was to enable increased integration and attendant efficiency within these markets. In this paper, we analyse three major European electricity markets - (APXUK, NordPool and Phelix) – before and after the 2009/72/EC Directive was introduced, to examine the extent to which those markets are efficient and whether they have become more integrated. We find little evidence of significant long run relationships between the different markets. We also find that the NordPool and Phelix markets in particular exhibit volatility persistence and clustering behaviour that is inconsistent with the postulations of market efficiency. The existence of continued inefficiencies across these power markets indicates that the desired goal of achieving an efficient and unified electricity market in the EU context is still a work in progress.

Suggested Citation

  • Morales, Lucía & Hanly, Jim, 2018. "European power markets–A journey towards efficiency," Energy Policy, Elsevier, vol. 116(C), pages 78-85.
    • Handle: RePEc:eee:enepol:v:116:y:2018:i:c:p:78-85
    DOI: 10.1016/j.enpol.2018.01.061
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    Cited by:

    1. Dobos, Teodora & Bichler, Martin & Knörr, Johannes, 2025. "Challenges in finding stable price zones in European electricity markets: Aiming to square the circle?," Applied Energy, Elsevier, vol. 382(C).
    2. George P. Papaioannou & Christos Dikaiakos & Akylas C. Stratigakos & Panos C. Papageorgiou & Konstantinos F. Krommydas, 2019. "Testing the Efficiency of Electricity Markets Using a New Composite Measure Based on Nonlinear TS Tools," Energies, MDPI, vol. 12(4), pages 1-30, February.
    3. Maciej Kostrzewski & Jadwiga Kostrzewska, 2021. "The Impact of Forecasting Jumps on Forecasting Electricity Prices," Energies, MDPI, vol. 14(2), pages 1-17, January.
    4. Divényi, Dániel & Polgári, Beáta & Sleisz, Ádám & Sőrés, Péter & Raisz, Dávid, 2021. "Investigating minimum income condition orders on European power exchanges: Controversial properties and enhancement proposals," Applied Energy, Elsevier, vol. 281(C).
    5. Karahan, Cenk C. & Odabaşı, Attila & Tiryaki, C. Sani, 2024. "Wired together: Integration and efficiency in European electricity markets," Energy Economics, Elsevier, vol. 133(C).

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