IDEAS home Printed from https://ideas.repec.org/a/sae/inrsre/v40y2017i2p99-140.html
   My bibliography  Save this article

Spatially Explicit Prediction of Wholesale Electricity Prices

Author

Listed:
  • James Wesley Burnett
  • Xueting Zhao

Abstract

Transmission constraints often limit the flow of electricity in a regional transmission network leading to strong interaction effects across different geographically distributed points within the system. In modern wholesale electricity markets, these transmission constraints lead to spatial patterns within the nodal electricity spot prices. This study exploits these spatial patterns to better predict spot prices within a wholesale electricity market. More specifically, we use the latest spatial panel data econometric models to compare within-sample and out-of-sample forecasts against nonspatial panel data models. The spatial panel data approach is explained by demonstrating a simple network optimization model. We find that a dynamic, spatial panel data model provides the best predictions within a forecasting error context. Our results may suggest that the spatial autocorrelation between node prices extends beyond the current market-defined zonal boundaries, which calls into question whether the zonal boundaries accurately reflect the congestion boundaries within the system.

Suggested Citation

  • James Wesley Burnett & Xueting Zhao, 2017. "Spatially Explicit Prediction of Wholesale Electricity Prices," International Regional Science Review, , vol. 40(2), pages 99-140, March.
    • Handle: RePEc:sae:inrsre:v:40:y:2017:i:2:p:99-140
    as

    Download full text from publisher

    File URL: http://irx.sagepub.com/content/40/2/99.abstract
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:aen:journl:ej38-3-bowen is not listed on IDEAS
    2. John J. García & Jesús López-Rodríguez & Jhonny Moncada-Mesa, 2017. "Spatial effects in the bid price setting strategies of the wholesale electricity markets: The case of Colombia," DOCUMENTOS DE TRABAJO CIEF 015660, UNIVERSIDAD EAFIT.
    3. Eric Bowen & Donald J. Lacombe, 2015. "Spatial interaction of Renewable Portfolio Standards and their effect on renewable generation within NERC regions," Working Papers 15-03, Department of Economics, West Virginia University.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:inrsre:v:40:y:2017:i:2:p:99-140. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.