Measuring inefficiency in international electricity trading

L.G. Montoya, Bowei Guo, David M Newbery, P.E. Dodds, G. Lipman and G. Castagneto Gissey

Energy Policy, 2020, vol. 143, issue C

Abstract: Interconnectors reduce the cost of supplying electricity if they are operated efficiently. We show that established metrics which are used to monitor electricity trading inefficiency are inaccurate for several typical trading conditions. We propose two new metrics—the Unweighted and Price-Weighted Inefficient Interconnector Utilisation indices—to address these deficiencies. These metrics are substantially more accurate than existing ones and perform equally well whether or not interconnected markets have coupled trading. Our analyses show a substantial decrease in inefficient trading between Great Britain (GB) and both France and the Netherlands after the European Union's market coupling regulations were introduced in 2014.

Keywords: Electricity trading efficiency; Cross-border allocation; Interconnector; Market coupling; Metrics (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Measuring inefficiency in international electricity trading (2019)
Working Paper: Measuring inefficiency in international electricity trading (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:143:y:2020:i:c:s0301421520302664

DOI: 10.1016/j.enpol.2020.111521

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