Increasing market interconnection: An analysis of the Italian electricity spot market

Federico Boffa, Viswanath Pingali and Davide Vannoni

International Journal of Industrial Organization, 2010, vol. 28, issue 3, 311-322

Abstract: We estimate the benefits (in terms of savings to end-users) resulting from an improved interconnectivity in the Italian electricity spot market. The market is currently divided into two geographic zones - North and South - with limited inter-zonal transmission capacity that often induces congestion, and hence potential inefficiency. By simulating a fully interconnected market, we predict that the total spot market expenditure would reduce substantially. Moreover, since savings do not increase linearly with the size of new transmission capacity, even a slight increment to transmission capacity is found to substantially reduce end-users' expenditures. Finally, our analysis shows that the (partly State owned) dominant firm in the market is not maximizing short-term profits.

Keywords: Transmission; constraints; Zonal; pricing; Congestion; Electricity; industry (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (25)

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Related works:
Working Paper: Increasing Market Interconnection: An analysis of the Italian Electricity Spot Market (2009)
Working Paper: MIncreasing Market Interconnection: an analysis of the Italian Electricity Spot Market (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:28:y:2010:i:3:p:311-322

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