Electricity wholesale market prices in Europe: Convergence?☆ Export

@article{citeulike:4748617, abstract = {This paper tests the hypothesis that the ongoing restructuring process in the European electricity sector has led to a common European market for electricity. Based on a Principal Component Analysis (PCA) of wholesale electricity prices in 2002–2006, we reject the assumption of full market integration. For several pairs of countries, the weaker hypothesis of (bilateral) convergence is accepted based on unit root tests (KPSS and ADF) and a convergence test based on filtered pairwise price relations. This indicates that the efforts to develop a single European market for electricity were so far only partially successful. We show that the daily auction prices of scarce cross-border transmission capacities are insufficient to explain the persistence of international price differentials. Empirically, our findings confirm the insufficiency of explicit capacity auctions as stated in the theoretical literature.}, author = {Zachmann, Georg}, citeulike-article-id = {4748617}, citeulike-linkout-0 = {http://dx.doi.org/10.1016/j.eneco.2007.07.002}, citeulike-linkout-1 = {http://linkinghub.elsevier.com/retrieve/pii/S0140988307000837}, doi = {10.1016/j.eneco.2007.07.002}, issn = {01409883}, journal = {Energy Economics}, keywords = {convergence, coupling, energy, market}, month = {July}, number = {4}, pages = {1659--1671}, posted-at = {2009-06-05 08:55:57}, priority = {2}, title = {Electricity wholesale market prices in Europe: Convergence?☆}, url = {http://dx.doi.org/10.1016/j.eneco.2007.07.002}, volume = {30}, year = {2008} }

TY - JOUR ID - citeulike:4748617 L3 - citeulike-article-id:4748617 N2 - This paper tests the hypothesis that the ongoing restructuring process in the European electricity sector has led to a common European market for electricity. Based on a Principal Component Analysis (PCA) of wholesale electricity prices in 2002–2006, we reject the assumption of full market integration. For several pairs of countries, the weaker hypothesis of (bilateral) convergence is accepted based on unit root tests (KPSS and ADF) and a convergence test based on filtered pairwise price relations. This indicates that the efforts to develop a single European market for electricity were so far only partially successful. We show that the daily auction prices of scarce cross-border transmission capacities are insufficient to explain the persistence of international price differentials. Empirically, our findings confirm the insufficiency of explicit capacity auctions as stated in the theoretical literature. IS - 4 JF - Energy Economics SN - 01409883 EP - 1671 TI - Electricity wholesale market prices in Europe: Convergence?☆ VL - 30 SP - 1659 KW - convergence KW - coupling KW - energy KW - market AU - Zachmann, Georg PY - 2008/07// UR - http://dx.doi.org/10.1016/j.eneco.2007.07.002 ER -