Interconnections and market integration in the Irish Single Electricity Market

Rabindra Nepal and Tooraj Jamasb

Energy Policy, 2012, vol. 51, issue C, 425-434

Abstract: Interconnections can be an effective way to increase competition and improve market integration in concentrated wholesale electricity markets with limited number of participants. This paper examines the potential for interconnections and increasing market integration in the Irish Single Electricity Market (SEM). We use a time-varying Kalman filter technique to assess the degree of market integration between SEM and other large, mature and interconnected wholesale electricity markets in Europe including Great Britain (GB). The results indicate no market integration between SEM and other European markets except for Elspot and GB. We show that the current state of market integration between SEM and GB is just 17% indicating potential to improve market integration via increased interconnector capacity. The results indicate that liquidity of wholesale markets might be a crucial factor in the market integration process while our results remain inconclusive in determining whether increased trade of renewables can improve market integration.

Keywords: Market integration; Liquidity; Competition (search for similar items in EconPapers)
JEL-codes: C22 D02 G1 L94 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:51:y:2012:i:c:p:425-434

DOI: 10.1016/j.enpol.2012.08.047

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