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Reaching New Lows? The Pandemic's Consequences for Electricity Markets

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  • David BENATIA

    (CREST (UMR 9194), ENSAE, Institut Polytechnique de Paris)

Abstract

The large reductions in electricity demand caused by the COVID-19 crisis have disrupted electricity systems worldwide. This article draws insights from New York into the consequences of the pandemic for electricity markets. It disentangles the effects of the demand reductions, increased forecast errors, and fuel price drops on the day-ahead and real-time markets. From March 16 to May 31, New York has experienced a 6.5% demand reduction, prices have dropped, and producers have lost $87 million (-18%). This estimate extrapolates to $2.6 billion for the entire US. Looking forward, these new lows signal the needs for market design adjustments.

Suggested Citation

  • David BENATIA, 2020. "Reaching New Lows? The Pandemic's Consequences for Electricity Markets," Working Papers 2020-12, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2020-12
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    References listed on IDEAS

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    Cited by:

    1. Augusto Cerqua & Roberta Di Stefano & Marco Letta & Sara Miccoli, 2021. "Local mortality estimates during the COVID-19 pandemic in Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(4), pages 1189-1217, October.
    2. Cerqua, Augusto & Letta, Marco, 2022. "Local inequalities of the COVID-19 crisis," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    3. Olympia Bover & Natalia Fabra & Sandra García-Uribe & Aitor Lacuesta & Roberto Ramos, 2020. "Firms and households during the pandemic: what do we learn from their electricity consumption?," Occasional Papers 2031, Banco de España.
    4. Fabra, Natalia & Lacuesta, Aitor & Souza, Mateus, 2022. "The implicit cost of carbon abatement during the COVID-19 pandemic," European Economic Review, Elsevier, vol. 147(C).
    5. Cerqua, Augusto & Letta, Marco, 2020. "Local economies amidst the COVID-19 crisis in Italy: a tale of diverging trajectories," MPRA Paper 104404, University Library of Munich, Germany.

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    More about this item

    Keywords

    COVID-19; Demand; Energy; Electricity Markets.;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

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