Reaching New Lows? The Pandemic's Consequences for Electricity Markets

David Benatia

No 2020-12, Working Papers from Center for Research in Economics and Statistics

Abstract: The large reductions in electricity demand caused by the COVID-19 crisis have disrupted electricity systems worldwide. This article draws insights from New York into the consequences of the pandemic for electricity markets. It disentangles the effects of the demand reductions, increased forecast errors, and fuel price drops on the day-ahead and real-time markets. From March 16 to May 31, New York has experienced a 6.5% demand reduction, prices have dropped, and producers have lost $87 million (-18%). This estimate extrapolates to $2.6 billion for the entire US. Looking forward, these new lows signal the needs for market design adjustments.

Keywords: COVID-19; Demand; Energy; Electricity Markets. (search for similar items in EconPapers)
JEL-codes: L94 Q02 Q41 Q47 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2020-06-05
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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