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Day-Ahead Electricity Markets: Is There a Place For a Day-Ahead Market in NZEM?

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  • Evans, Lewis
  • Counsell, Kevin

Abstract

In this paper we explain the operation and design of day-ahead markets in an electricity market. Day-ahead markets complement real-time markets which must be run to ensure balance in the system and offer a number of benefits to electricity market participants. We argue that in the context of the New Zealand electricity market the benefits of operating a day-ahead market are likely to outweigh the costs. We show that simple forecasts suggest day-ahead prices in New Zealand would be considerably less volatile than real-time prices. As day-ahead markets are effectively hedge markets for a short time period the issues we raise are also important for the operation and development of other longer-term hedge markets.

Suggested Citation

  • Evans, Lewis & Counsell, Kevin, 2003. "Day-Ahead Electricity Markets: Is There a Place For a Day-Ahead Market in NZEM?," Working Paper Series 18981, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:18981
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    File URL: https://ir.wgtn.ac.nz/handle/123456789/18981
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    References listed on IDEAS

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    1. Fraser, Hamish, 2001. "The Importance of an Active Demand Side in the Electricity Industry," The Electricity Journal, Elsevier, vol. 14(9), pages 52-73, November.
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    Keywords

    electricity; day-ahead market;

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