Electricity market integration and the impact of unilateral policy reforms

Luigi Grossi, Sven Heim, Kai Hüschelrath and Michael Waterson
Authors registered in the RePEc Author Service: Kai Hueschelrath

No 15-072, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The harmonization and integration of separate national energy markets to an interconnected internal European market is a top priority of the European Commission. However, as energy policy largely remains subject to national sovereignty, a higher degree of integration can cause unilateral national policies to harm interconnected markets. We investigate the impact of two distinct national reforms in Germany - the phase-out of nuclear power plants after the Fukushima incident and the expansion of renewables promoted by fixed feed-in tariffs and unlimited priority feed-in - on neighbouring countries. We find that the phase-out triggered price increases of up to 19 percent in neighbouring countries whilst the renewable energy support schemes caused a price decrease of up to 0.17 percent for each percent of additional generation from German renewables. We also apply a novel approach to estimate the degree of market integration and find large differences between neighbouring countries in a range from 14 percent to 99 percent. Our findings point up the need for increased efforts to harmonize national energy policies, but also the need to consider the impact of unilateral environmental measures on other countries' supplies in the context of a partially integrated and partly unilateral system.

Keywords: Energy; Electricity; Market Integration; Nuclear Phase-Out; Renewables (search for similar items in EconPapers)
JEL-codes: L51 L94 Q41 Q48 Q54 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ene, nep-eur, nep-ind and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/121492/1/837999952.pdf (application/pdf)

Related works:
Journal Article: Electricity market integration and the impact of unilateral policy reforms (2018)
Working Paper: Electricity market integration and the impact of unilateral policy reforms (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:15072

Access Statistics for this paper

More papers in ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().