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Electricity Demand in Wholesale Italian Market

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  • Simona Bigerna
  • Carlo Andrea BOLLINO

Abstract

In this paper we pursue two objectives: firstly we construct a theory based behavioral model of electricity demand in the Italian market; secondly we measure demand elasticity at hourly level, directly from consumer behavior. This is a novel approach providing the first attempt in the literature to estimate demand elasticity using individual demand bid data, in the Italian Power Exchange (IPEX). Econometric estimation allows us to identify robust results, showing that elasticity varies significantly with: time of the day; day of the week; season of the year; pattern of line congestion, as well as according to the level of equilibrium price. This has a policy implication: fostering more competition on the supply side could yield lower equilibrium prices and proportionately much higher quantities, for a lower offer curve, shifted to the right, would intersect a flatter portion of the demand curve.

Suggested Citation

  • Simona Bigerna & Carlo Andrea BOLLINO, 2012. "Electricity Demand in Wholesale Italian Market," Quaderni del Dipartimento di Economia, Finanza e Statistica 108/2012, Università di Perugia, Dipartimento Economia.
  • Handle: RePEc:pia:wpaper:108/2012
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Simona Bigerna and Carlo Andrea Bollino, 2016. "Optimal Price Design in the Wholesale Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    3. Bigerna, Simona & Bollino, Carlo Andrea, 2016. "Ramsey prices in the Italian electricity market," Energy Policy, Elsevier, vol. 88(C), pages 603-612.
    4. Maria Chiara D'Errico & Carlo Andrea Bollino, 2015. "Bayesian Analysis of Demand Elasticity in the Italian Electricity Market," Sustainability, MDPI, Open Access Journal, vol. 7(9), pages 1-22, September.
    5. Simona Bigerna and Carlo Andrea Bollino, 2015. "A System Of Hourly Demand in the Italian Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    6. Rowland, Christopher S. & Mjelde, James W. & Dharmasena, Senarath, 2017. "Policy implications of considering pre-commitments in U.S. aggregate energy demand system," Energy Policy, Elsevier, vol. 102(C), pages 406-413.
    7. José M. Labeaga & Xavier Labandeira & Xiral López-Otero, 2018. "Energy Tax Reform and Poverty Alleviation in Mexico," Working Papers 1801, Universidade de Vigo, Departamento de Economía Aplicada.
    8. Simona Bigerna & Carlo Andrea BOLLINO, 2013. "Hourly Electricity Demand in Italian Market," Quaderni del Dipartimento di Economia, Finanza e Statistica 121/2013, Università di Perugia, Dipartimento Economia.
    9. repec:eee:eneeco:v:66:y:2017:i:c:p:421-430 is not listed on IDEAS
    10. Spindler, Christian & Woll, Oliver & Schober, Dominik, 2018. "Sharing is not caring: Backward integration of consumers," ZEW Discussion Papers 18-006, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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    JEL classification:

    • F0 - International Economics - - General

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