Electricity price spike formation and LNG prices effect under gross bidding scheme in JEPX

Samin Rassi and Takashi Kanamura

Energy Policy, 2023, vol. 177, issue C

Abstract: This study empirically analyzes the price spikes that occurred in the Japan Electric Power Exchange (JEPX) market in January 2021 and draws energy policy implications from the results. The contributions of this research are as follows. First, we propose a novel structural model to capture electricity price spikes based on the buy and sell bid curves of the JEPX order book and incorporate the effect of LNG spot price fluctuations on the price of electricity. Second, the results of our empirical analysis show that the model can adequately capture the price spike in the JEPX market that occurred in January 2021. Third, the estimation of the model parameters shows that the natural gas spot price immediately shifts the price curve upward. As an important energy policy implication from the results, we propose that to manage the risk of electricity price spikes, the LNG effect on the market players’ bidding behavior, rather than the marginal cost of the supply curve, be considered; from this perspective, the LNG spot price, rather than the trend of the LNG price a few months earlier, must be monitored, and the institutional design of the JEPX market should take this into account.

Keywords: Electricity spot price spike; Structural price model; JEPX; LNG spot price; Fundamental price model (search for similar items in EconPapers)
JEL-codes: C51 L98 Q41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421523001374
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: https://EconPapers.repec.org/RePEc:eee:enepol:v:177:y:2023:i:c:s0301421523001374

DOI: 10.1016/j.enpol.2023.113552

Access Statistics for this article

Energy Policy is currently edited by N. France

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