IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/1509.html

The benefits of integrating European electricity markets

Author

Listed:
  • David Newbery
  • Goran Strbac
  • Ivan Viehoff

Abstract

The European Commission’s Target Electricity Model aims to integrate EU electricity markets. This paper estimates the potential benefit to the EU of coupling interconnectors to increase the efficiency of trading day-ahead, intra-day and sharing balancing services efficiently across borders. Further gains are possible by eliminating unscheduled flows and avoiding the curtailment of renewables with better market design. In the short run the gains could be as high as €3.3 billion/yr, more than 100% of the current gains from trade. About one-third of this total comes from day-ahead coupling and another third from shared balancing.

Suggested Citation

  • David Newbery & Goran Strbac & Ivan Viehoff, 2015. "The benefits of integrating European electricity markets," Cambridge Working Papers in Economics 1509, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1509
    Note: dmgn
    as

    Download full text from publisher

    File URL: https://www.econ.cam.ac.uk/sites/default/files/publication-cwpe-pdfs/cwpe1509.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Neuhoff, Karsten & Barquin, Julian & Boots, Maroeska G. & Ehrenmann, Andreas & Hobbs, Benjamin F. & Rijkers, Fieke A.M. & Vazquez, Miguel, 2005. "Network-constrained Cournot models of liberalized electricity markets: the devil is in the details," Energy Economics, Elsevier, vol. 27(3), pages 495-525, May.
    2. Richard Green, 2007. "Nodal pricing of electricity: how much does it cost to get it wrong?," Journal of Regulatory Economics, Springer, vol. 31(2), pages 125-149, April.
    3. Meeus, Leonardo, 2011. "Implicit auctioning on the Kontek Cable: Third time lucky?," Energy Economics, Elsevier, vol. 33(3), pages 413-418, May.
    4. Böckers, Veit & Haucap, Justus & Heimeshoff, Ulrich, 2013. "Benefits of an integrated European electricity market," DICE Discussion Papers 109, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    5. repec:aen:eeepjl:eeep4-2-newbery is not listed on IDEAS
    6. Newbery, David M., 2016. "Towards a green energy economy? The EU Energy Union’s transition to a low-carbon zero subsidy electricity system – Lessons from the UK’s Electricity Market Reform," Applied Energy, Elsevier, vol. 179(C), pages 1321-1330.
    7. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    8. repec:diw:diwwpp:dp1166 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Geoffrey Mabea, 2023. "Simulating Generalised Locational Marginal Pricing for Power Markets in East Africa," International Journal of Energy Economics and Policy, International Journal of Energy Economics and Policy, vol. 13(5), pages 450-460, September.
    2. Alexander Zerrahn & Daniel Huppmann, 2014. "Network Expansion to Mitigate Market Power: How Increased Integration Fosters Welfare," Discussion Papers of DIW Berlin 1380, DIW Berlin, German Institute for Economic Research.
    3. Dijk, Justin & Willems, Bert, 2011. "The effect of counter-trading on competition in electricity markets," Energy Policy, Elsevier, vol. 39(3), pages 1764-1773, March.
    4. Grimm, Veronika & Martin, Alexander & Weibelzahl, Martin & Zöttl, Gregor, 2014. "Transmission and Generation Investment in Electricity Markets: The Effects of Market Splitting and Network Fee Regimes," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 460, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    5. Petropoulos, Georgios & Willems, Bert, 2020. "Long-term transmission rights and dynamic efficiency," Energy Economics, Elsevier, vol. 88(C).
    6. Jan Abrell & Hannes Weigt, 2012. "Combining Energy Networks," Networks and Spatial Economics, Springer, vol. 12(3), pages 377-401, September.
    7. Holmberg, P. & Lazarczyk, E., 2012. "Congestion management in electricity networks: Nodal, zonal and discriminatory pricing," Cambridge Working Papers in Economics 1219, Faculty of Economics, University of Cambridge.
    8. Creti, Anna & Fumagalli, Eileen & Fumagalli, Elena, 2010. "Integration of electricity markets in Europe: Relevant issues for Italy," Energy Policy, Elsevier, vol. 38(11), pages 6966-6976, November.
    9. Grimm, Veronika & Martin, Alexander & Schmidt, Martin & Weibelzahl, Martin & Zöttl, Gregor, 2016. "Transmission and generation investment in electricity markets: The effects of market splitting and network fee regimes," European Journal of Operational Research, Elsevier, vol. 254(2), pages 493-509.
    10. Blázquez De Paz, Mario, 2017. "Production or Transmission Investments? A Comparative Analysis," Working Paper Series 1158, Research Institute of Industrial Economics.
    11. Janda, Karel & Málek, Jan & Rečka, Lukáš, 2017. "Influence of renewable energy sources on transmission networks in Central Europe," Energy Policy, Elsevier, vol. 108(C), pages 524-537.
    12. Karel Janda & Jan Malek & Lukas Recka, 2017. "Influence of Renewable Energy Sources on Electricity Transmission Networks in Central Europe," Working Papers IES 2017/05, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2017.
    13. Grimm, Veronika & Martin, Alexander & Weibenzahl, Martin & Zoettl, Gregor, 2014. "Transmission and generation investment in electricity markets: The effects of market splitting and network fee regimes," FAU Discussion Papers in Economics 04/2014, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    14. Geske, Joachim & Green, Richard & Staffell, Iain, 2020. "Elecxit: The cost of bilaterally uncoupling British-EU electricity trade," Energy Economics, Elsevier, vol. 85(C).
    15. José Antonio Rodríguez Martín & Juan Dios Jiménez Aguilera & José Antonio Salinas Fernández & José María Martín Martín, 2016. "Millennium Development Goals 4 and 5: Progress in the Least Developed Countries of Asia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(2), pages 489-504, November.
    16. Tarek Roshdy Gebba & Mohamed Gamal Aboelmaged, 2016. "Corporate Governance of UAE Financial Institutions: A Comparative Study between Conventional and Islamic Banks," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(5), pages 1-7.
    17. Nelson, Ewan & Warren, Peter, 2020. "UK transport decoupling: On track for clean growth in transport?," Transport Policy, Elsevier, vol. 90(C), pages 39-51.
    18. Guo, Bowei & Newbery, David, 2021. "The cost of uncoupling GB interconnectors," Energy Policy, Elsevier, vol. 158(C).
    19. Antonio Bassanetti & Matteo Bugamelli & Sandro Momigliano & Roberto Sabbatini & Francesco Zollino, 2014. "The policy response to macroeconomic and fiscal imbalances in Italy in the last fifteen years," PSL Quarterly Review, Economia civile, vol. 67(268), pages 55-103.
    20. Tanguy Janssen, Yann Rebours and Philippe Dessante, 2012. "Tight Volume Coupling: Analytical Model, Adverse Flow Causality and Potential Improvements," RSCAS Working Papers 2012/09, European University Institute.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • F15 - International Economics - - Trade - - - Economic Integration
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:cam:camdae:1509. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.