Economics at your fingertips  

Pricing effects of the electricity market reform in Brazil

Toby Daglish, Gabriel Godofredo Fiuza de Bragança, Sally Owen and Teresa Romano

Energy Economics, 2021, vol. 97, issue C

Abstract: We examine electricity market reform in Brazil. From 1998 until 2004, the largely hydro-powered market featured a forward market in which bilateral contracts were negotiated. In March 2004, this was partially replaced by a centralised clearing of forward positions, with the objective of stabilising electricity prices. We develop a theoretical model for the Brazilian forward electricity market, showing how generator entry would be affected by the two regimes. We then model monthly prices using a two-state Markov Switching model, allowing offtakes to affect prices, volatility and transition probabilities. Consistent with our theory, we show that while the reforms decreased volatility in some regions and states, the market became both more likely to enter a high price state, and more likely to remain in that state for a protracted period.

Keywords: Electricity prices; Renewable electricity; Brazil; Markov switching; Electricity market structure (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.eneco.2021.105197

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2022-03-09
Handle: RePEc:eee:eneeco:v:97:y:2021:i:c:s014098832100102x