MIncreasing Market Interconnection: an analysis of the Italian Electricity Spot Market

Federico Boffa and Viswanath Pingali
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Viswanath Pingali: School of Economics and Management, Free University of Bolzano, Cornerstone Research-Boston

No 17-2008, Working Papers from Macerata University, Department of Studies on Economic Development (DiSSE)

Abstract:

We estimate the bene ts resulting from completely interconnecting the Italian electricity spot market. The market is currently divided into two geographic zones - North and South - with limited interzonal transmission capacity that often induces congestion, and hence potential inefficiency. By simulating a fully interconnected market for May 2004, we predict that the total spot market expenditure reduces substantially by almost four percent. Our analysis finds evidence that the (partly State owned) major firm in the market does not currently maximize its short-term profit, and would benefit as well from improved interconnection.

Keywords: Transmission constraints; self-regulated monopoly; zonal pricing; congestion (search for similar items in EconPapers)
JEL-codes: O1 O11 (search for similar items in EconPapers)
Date: 2008-06, Revised 2008-11
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Related works:
Journal Article: Increasing market interconnection: An analysis of the Italian electricity spot market (2010)
Working Paper: Increasing Market Interconnection: An analysis of the Italian Electricity Spot Market (2009)
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