Electricity Demand in Wholesale Italian Market

Simona Bigerna () and Carlo Andrea Bollino ()

No 108/2012, Quaderni del Dipartimento di Economia, Finanza e Statistica from Università di Perugia, Dipartimento Economia

Abstract: In this paper we pursue two objectives: firstly we construct a theory based behavioral model of electricity demand in the Italian market; secondly we measure demand elasticity at hourly level, directly from consumer behavior. This is a novel approach providing the first attempt in the literature to estimate demand elasticity using individual demand bid data, in the Italian Power Exchange (IPEX). Econometric estimation allows us to identify robust results, showing that elasticity varies significantly with: time of the day; day of the week; season of the year; pattern of line congestion, as well as according to the level of equilibrium price. This has a policy implication: fostering more competition on the supply side could yield lower equilibrium prices and proportionately much higher quantities, for a lower offer curve, shifted to the right, would intersect a flatter portion of the demand curve.

Pages: 22 pages
Date: 2012-10-15
New Economics Papers: this item is included in nep-ene and nep-ind
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Citations: View citations in EconPapers (2)

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Journal Article: Electricity Demand in Wholesale Italian Market (2014)
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