Electricity market resilience in the face of Hurricane Harvey: A network-oriented approach

Yue Zhao, Adria E. Brooks and Xiaodong Du

Energy Economics, 2024, vol. 139, issue C

Abstract: In our study, we analyze the nodal price responses to Hurricane Harvey in the Texas wholesale electricity market, treating the event as a natural experiment. Using a network matrix and synthetic control method, we find that the most significant price impacts occurred in southern Texas, particularly in nodes that were connected to fewer other nodes and were electrically closer to the most damaged parts of the network. This finding highlights the importance of adopting an electric network-oriented perspective when examining the impacts of external shocks on the wholesale electricity market. Furthermore, our study reveals that counties with inferior economic conditions and frequent exposure to hurricanes experienced more substantial economic losses due to electricity price spikes. Therefore, enhancing electric infrastructure and disaster preparedness in those regions is crucial for policy considerations.

Keywords: Nodal prices; Transmission network; Synthetic control; Texas wholesale electricity market (search for similar items in EconPapers)
JEL-codes: C53 Q41 Q48 Q54 R11 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:139:y:2024:i:c:s0140988324005875

DOI: 10.1016/j.eneco.2024.107879

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