Measuring the impact of market coupling on the Italian electricity market using ELFO++

Elisabetta Pellini

No 133, Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) from Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey

Abstract: This paper evaluates the impact on the Italian electricity market of replacing the current explicit auction mechanism with market coupling. Maximizing the use of the cross-border interconnection capacity, market coupling increases the level of market integration and facilitates the access to low-cost generation by consumers located in high-cost generation countries. Thus, it is expected that a high-priced area such as Italy could greatly benefit from the introduction of this mechanism. In this paper, the welfare benefits are estimated under alternative market scenarios for 2012, employing the optimal dispatch model ELFO++. The results of the simulations suggest that the improvement in social surplus is likely to be significant, especially when market fundamentals are tight.

Keywords: Market coupling; market integration; Italian day-ahead electricity market. (search for similar items in EconPapers)
JEL-codes: C61 C63 D40 L10 Q40 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2011-10
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Energy Policy, 48, 2012, pp. 322–333. (Revised Version)

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Persistent link: https://EconPapers.repec.org/RePEc:sur:seedps:133

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