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Implicit Auctioning on the Kontek Cable: Third Time Lucky?

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  • Leonardo Meeus

Abstract

Cross-border capacities in Europe are currently inefficiently used. Implicit auctioning is about eliminating these cross-border trade inefficiencies by internalizing the arbitrage into the auction procedures of the Power Exchanges that are organizing trade nationally. On the Kontek Cable, implicit auctioning has been implemented without price coordination between the involved Power Exchanges. This implementation, referred to as “volume or dome coupling” as opposed to “price coupling”, has been argued to be institutionally easier to implement. The Kontek Cable experimented with three different implicit auctioning implementations whose performance we analyze empirically in this paper. We find that the third implementation is significantly outperforming the previous two implementations, but in this third implementation stakeholders partly abandoned the volume coupling approach they initially believed to be a viable alternative to price coupling.

Suggested Citation

  • Leonardo Meeus, 2010. "Implicit Auctioning on the Kontek Cable: Third Time Lucky?," RSCAS Working Papers 2010/49, European University Institute.
    • Handle: RePEc:rsc:rsceui:2010/49
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    Cited by:

    1. Guo, Bowei & Newbery, David, 2021. "The cost of uncoupling GB interconnectors," Energy Policy, Elsevier, vol. 158(C).
    2. 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.
    3. Richter, Jan & Viehmann, Johannes, 2014. "The value of information in explicit cross-border capacity auction regimes in electricity markets," Energy Policy, Elsevier, vol. 70(C), pages 74-84.
    4. Luigi De Paoli & Elena Fumagalli, 2013. "Estimating welfare losses and gains in explicit auctions for power trade: an application to the Italian case," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2013(2), pages 153-181.
    5. Hadush, Samson Yemane & Meeus, Leonardo, 2018. "DSO-TSO cooperation issues and solutions for distribution grid congestion management," Energy Policy, Elsevier, vol. 120(C), pages 610-621.
    6. Newbery, David & Strbac, Goran & Viehoff, Ivan, 2016. "The benefits of integrating European electricity markets," Energy Policy, Elsevier, vol. 94(C), pages 253-263.
    7. Geske, Joachim & Green, Richard & Staffell, Iain, 2020. "Elecxit: The cost of bilaterally uncoupling British-EU electricity trade," Energy Economics, Elsevier, vol. 85(C).
    8. Tom Brijs & Daniel Huppmann & Sauleh Siddiqui & Ronnie Belmans, 2016. "Auction-Based Allocation of Shared Electricity Storage Resources through Physical Storage Rights," Discussion Papers of DIW Berlin 1566, DIW Berlin, German Institute for Economic Research.
    9. Abadie, Luis María & Chamorro, José Manuel, 2021. "Evaluation of a cross-border electricity interconnection: The case of Spain-France," Energy, Elsevier, vol. 233(C).
    10. Pellini, Elisabetta, 2012. "Measuring the impact of market coupling on the Italian electricity market," Energy Policy, Elsevier, vol. 48(C), pages 322-333.
    11. 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.
    12. Saguan, Marcelo & Meeus, Leonardo, 2014. "Impact of the regulatory framework for transmission investments on the cost of renewable energy in the EU," Energy Economics, Elsevier, vol. 43(C), pages 185-194.
    13. Montoya, L.G. & Guo, B. & Newbery, D. & Dodds, P.E. & Lipman, G. & Castagneto Gissey, G., 2020. "Measuring inefficiency in international electricity trading," Energy Policy, Elsevier, vol. 143(C).
    14. Halužan, Marko & Verbič, Miroslav & Zorić, Jelena, 2022. "An integrated model for electricity market coupling simulations: Evidence from the European power market crossroad," Utilities Policy, Elsevier, vol. 79(C).
    15. Marcelo Saguan & Leonardo Meeus, 2011. "Modeling the Cost of Achieving a Renewable Energy Target: Does it Pay to Cooperate Across Borders?," RSCAS Working Papers 2011/46, European University Institute.
    16. Geoffrey Mabea, 2023. "Simulating Generalised Locational Marginal Pricing for Power Markets in East Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 450-460, September.
    17. Christos Roumkos & Pandelis Biskas & Ilias Marneris, 2020. "Modeling Framework Simulating the TERRE Activation Optimization Function," Energies, MDPI, vol. 13(11), pages 1-30, June.

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