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How to play the game as the bridge between two European power markets – the case of Western Denmark

Author

Listed:
  • Amundsen, Eirik S.

    (University of Bergen, Department of Economics)

  • Donslund, Bjarne

    (Eltra)

  • Olsen, Ole Jess

    (Department of Environment, Technology and Social Studies, Roskilde University)

Abstract

In this paper we set out to investigate the price and quantity fluctuations in Western Denmark, which took place during the winter season 2002-2003. This was a period, which exhibited critical supply conditions in the Nordic area due to a shortage of hydropower. On average, the market in Western Denmark helped to ease the situation by large net exports. However, a more detailed investigation reveals anomalies in market behaviour that do not fit well into this overall positive description of the situation. Several explanations of the anomalies are offered. These may work separately or act in concert. In particular, we look at the large capacity of volatile wind power; the role of the guaranteed fixed prices and the design and functioning of the special auction system of transmission capacity in the interface between Western Denmark and Germany.

Suggested Citation

  • Amundsen, Eirik S. & Donslund, Bjarne & Olsen, Ole Jess, 2005. "How to play the game as the bridge between two European power markets – the case of Western Denmark," Working Papers in Economics 02/05, University of Bergen, Department of Economics.
    • Handle: RePEc:hhs:bergec:2005_002
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    More about this item

    Keywords

    electricity trade; market power; wind power;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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