Electricity Markets Instability: Causes of Price Dispersion

The creation of a single competitive EU energy market is aimed at establishing a fair price in the integrated market space. However, electricity markets in European countries remain rather fragmented, and the marginal pricing method, which is the basic one used in the market, conditions a persistent...

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Autores principales:	Qiang Chen, Anush Balian, Mykola Kyzym, Tetiana Salashenko, Inna Gryshova, Viktoriia Khaustova
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	electricity market bidding zone price dispersion market conditions generation structure flow direction Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350
Acceso en línea:	https://doaj.org/article/b5a7a314b2ed42009aa751084dc58831
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spelling	oai:doaj.org-article:b5a7a314b2ed42009aa751084dc588312021-11-25T19:00:18ZElectricity Markets Instability: Causes of Price Dispersion10.3390/su1322123432071-1050https://doaj.org/article/b5a7a314b2ed42009aa751084dc588312021-11-01T00:00:00Zhttps://www.mdpi.com/2071-1050/13/22/12343https://doaj.org/toc/2071-1050The creation of a single competitive EU energy market is aimed at establishing a fair price in the integrated market space. However, electricity markets in European countries remain rather fragmented, and the marginal pricing method, which is the basic one used in the market, conditions a persistent price dispersion in the search for market equilibrium. This study examines the dispersion of electricity prices in 40 bidding zones in 26 European countries by means of quartile analysis. The geographic orientation of the markets, direction of electricity flows, and structure of electricity generation are considered as the causes of this dispersion. In the study, the geographical boundaries of the electricity markets are determined using the methods of correlation analysis of prices and transitive closure of commercial electricity flows. This makes it possible to single out highly integrated, moderately integrated, poorly integrated, and non-integrated markets. Using cluster analysis, electricity markets are classified according to the structure of electricity generation and direction of flows, with the identification of five clusters based on the dominant type of generation and three clusters based on the dominant direction of electricity supply. For each factor under investigation, the intragroup price dispersion is established. The results of the study have allowed to build a three-dimensional matrix that provides for determining the directions of changes in electricity prices when moving between its quadrants.Qiang ChenAnush BalianMykola KyzymTetiana SalashenkoInna GryshovaViktoriia KhaustovaMDPI AGarticleelectricity marketbidding zoneprice dispersionmarket conditionsgeneration structureflow directionEnvironmental effects of industries and plantsTD194-195Renewable energy sourcesTJ807-830Environmental sciencesGE1-350ENSustainability, Vol 13, Iss 12343, p 12343 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	electricity market bidding zone price dispersion market conditions generation structure flow direction Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350
spellingShingle	electricity market bidding zone price dispersion market conditions generation structure flow direction Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350 Qiang Chen Anush Balian Mykola Kyzym Tetiana Salashenko Inna Gryshova Viktoriia Khaustova Electricity Markets Instability: Causes of Price Dispersion
description	The creation of a single competitive EU energy market is aimed at establishing a fair price in the integrated market space. However, electricity markets in European countries remain rather fragmented, and the marginal pricing method, which is the basic one used in the market, conditions a persistent price dispersion in the search for market equilibrium. This study examines the dispersion of electricity prices in 40 bidding zones in 26 European countries by means of quartile analysis. The geographic orientation of the markets, direction of electricity flows, and structure of electricity generation are considered as the causes of this dispersion. In the study, the geographical boundaries of the electricity markets are determined using the methods of correlation analysis of prices and transitive closure of commercial electricity flows. This makes it possible to single out highly integrated, moderately integrated, poorly integrated, and non-integrated markets. Using cluster analysis, electricity markets are classified according to the structure of electricity generation and direction of flows, with the identification of five clusters based on the dominant type of generation and three clusters based on the dominant direction of electricity supply. For each factor under investigation, the intragroup price dispersion is established. The results of the study have allowed to build a three-dimensional matrix that provides for determining the directions of changes in electricity prices when moving between its quadrants.
format	article
author	Qiang Chen Anush Balian Mykola Kyzym Tetiana Salashenko Inna Gryshova Viktoriia Khaustova
author_facet	Qiang Chen Anush Balian Mykola Kyzym Tetiana Salashenko Inna Gryshova Viktoriia Khaustova
author_sort	Qiang Chen
title	Electricity Markets Instability: Causes of Price Dispersion
title_short	Electricity Markets Instability: Causes of Price Dispersion
title_full	Electricity Markets Instability: Causes of Price Dispersion
title_fullStr	Electricity Markets Instability: Causes of Price Dispersion
title_full_unstemmed	Electricity Markets Instability: Causes of Price Dispersion
title_sort	electricity markets instability: causes of price dispersion
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/b5a7a314b2ed42009aa751084dc58831
work_keys_str_mv	AT qiangchen electricitymarketsinstabilitycausesofpricedispersion AT anushbalian electricitymarketsinstabilitycausesofpricedispersion AT mykolakyzym electricitymarketsinstabilitycausesofpricedispersion AT tetianasalashenko electricitymarketsinstabilitycausesofpricedispersion AT innagryshova electricitymarketsinstabilitycausesofpricedispersion AT viktoriiakhaustova electricitymarketsinstabilitycausesofpricedispersion
_version_	1718410425833357312

Electricity Markets Instability: Causes of Price Dispersion

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