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MIncreasing Market Interconnection: an analysis of the Italian Electricity Spot Market

Author

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  • Federico Boffa

    (not available)

  • Viswanath Pingali

    (School of Economics and Management, Free University of Bolzano, Cornerstone Research-Boston)

Abstract

We estimate the bene ts resulting from completely interconnecting the Italian electricity spot market. The market is currently divided into two geographic zones - North and South - with limited interzonal transmission capacity that often induces congestion, and hence potential inefficiency. By simulating a fully interconnected market for May 2004, we predict that the total spot market expenditure reduces substantially by almost four percent. Our analysis finds evidence that the (partly State owned) major firm in the market does not currently maximize its short-term profit, and would benefit as well from improved interconnection.

Suggested Citation

  • Federico Boffa & Viswanath Pingali, 2008. "MIncreasing Market Interconnection: an analysis of the Italian Electricity Spot Market," Working Papers 17-2008, Macerata University, Department of Studies on Economic Development (DiSSE), revised Nov 2008.
  • Handle: RePEc:mcr:wpaper:wpaper00017
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    References listed on IDEAS

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    Cited by:

    1. Federico Boffa & Viswanath Pingali & Francesca Sala, 2015. "Strategic investment in merchant transmission: the impact of capacity utilization rules," Working Papers 2015/12, Institut d'Economia de Barcelona (IEB).
    2. Bigerna, Simona & Andrea Bollino, Carlo & Polinori, Paolo, 2015. "Marginal cost and congestion in the Italian electricity market: An indirect estimation approach," Energy Policy, Elsevier, vol. 85(C), pages 445-454.
    3. Andrea Petrella & Sandro Sapio, 2010. "No PUN intended: A time series analysis of the Italian day-ahead electricity prices," RSCAS Working Papers 2010/03, European University Institute.
    4. Zerrahn, Alexander & Huppmann, Daniel, 2014. "Network Expansion to Mitigate Market Power: How Increased Integration Fosters Welfare," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100459, Verein für Socialpolitik / German Economic Association.
    5. repec:kap:netspa:v:17:y:2017:i:2:d:10.1007_s11067-017-9338-1 is not listed on IDEAS
    6. Simona Bigerna, Carlo Andrea Bollino and Paolo Polinori, 2016. "Market Power and Transmission Congestion in the Italian Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    7. Ringler, Philipp & Keles, Dogan & Fichtner, Wolf, 2017. "How to benefit from a common European electricity market design," Energy Policy, Elsevier, vol. 101(C), pages 629-643.
    8. G. Papaioannou & P. Papaioannou & N. Parliaris, 2014. "Modeling the stylized facts of wholesale system marginal price (SMP) and the impacts of regulatory reforms on the Greek Electricity Market," Papers 1401.5452, arXiv.org.
    9. Petrella, Andrea & Sapio, Alessandro, 2012. "Assessing the impact of forward trading, retail liberalization, and white certificates on the Italian wholesale electricity prices," Energy Policy, Elsevier, vol. 40(C), pages 307-317.
    10. Bosco, Bruno & Parisio, Lucia & Pelagatti, Matteo, 2012. "Strategic bidding in vertically integrated power markets with an application to the Italian electricity auctions," Energy Economics, Elsevier, vol. 34(6), pages 2046-2057.
    11. Newbery, D. & Pollitt, M. & Ritz, R. & Strielkowski, W., 2017. "Market design for a high-renewables European electricity system," Cambridge Working Papers in Economics 1726, Faculty of Economics, University of Cambridge.
    12. Dagoumas, Athanasios S. & Koltsaklis, Nikolasos E. & Panapakidis, Ioannis P., 2017. "An integrated model for risk management in electricity trade," Energy, Elsevier, vol. 124(C), pages 350-363.
    13. Schill, Wolf-Peter & Egerer, Jonas & Rosellón, Juan, 2015. "Testing Regulatory Regimes for Power Transmission Expansion with Fluctuating Demand and Wind Generation," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 1-28.

    More about this item

    Keywords

    Transmission constraints; self-regulated monopoly; zonal pricing; congestion;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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