Cost Pass-Through in European Power Generation

Jan Abrell and Aleksandar Zaklan ()

Working papers from Faculty of Business and Economics - University of Basel

Abstract: We analyze the extent to which marginal producers in four European day-ahead electricity markets pass through short-run marginal cost, and its components fuel and carbon cost, to wholesale electricity prices. Parametric estimates show that pass-through is complete in France and Germany, and incomplete in the Iberian and Dutch markets, mainly driven by fuel cost. For carbon cost, pass-through is more heterogeneous, with the evidence suggesting over-shifting in Germany and the Netherlands. Semi-parametric estimates show that pass-through increases with demand. In sum, we show that despite being located in interconnected power markets, electricity consumers receive different fuel and carbon price signals.

JEL-codes: L94 Q41 Q54 Q58 (search for similar items in EconPapers)
Date: 2026-05-07
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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2026/04

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