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Decoding Restricted Participation in Sequential Electricity Markets

Andreas Knaut () and Martin Paschmann
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Martin Paschmann: Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)

No 2017-5, EWI Working Papers from Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)

Abstract: Restricted participation in sequential markets may cause high price volatility and welfare losses. In this paper we therefore analyze the drivers of restricted participation in the German intraday auction which is a short-term electricity market with quarter-hourly products. Applying a fundamental electricity market model with 15-minute temporal resolution, we identify the lack of sub-hourly market coupling being the most relevant driver of restricted participation. We derive a proxy for price volatility and find that full market coupling may trigger quarter-hourly price volatility to decrease by a factor close to four.

Keywords: Sequential Electricity Markets; Short-term Market Dynamics; Electricity Market Interaction; Short-term Price Formation; Restricted Market Participation; Price Volatility (search for similar items in EconPapers)
JEL-codes: C13 C51 D44 D47 L94 Q21 Q41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-reg
Date: 2017-06-13, Revised 2017-08-31
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ewikln:2017_005

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