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Faculty of Economics

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Newbery, D. M., Strbac, G. and Viehoff, I.

The benefits of integrating European electricity markets

CWPE1509

Abstract: The European Commission's Target Electricity Model aims to integrate EU electricity markets. This paper estimates the potential benefit to the EU of coupling interconnectors to increase the efficiency of trading day-ahead, intra-day and sharing balancing services efficiently across borders. Further gains are possible by eliminating unscheduled flows and avoiding the curtailment of renewables with better market design. In the short run the gains could be as high as €3.3 billion/yr, more than 100% of the current gains from trade. About one-third of this total comes from day-ahead coupling and another third from shared balancing.

Keywords: electricity market coupling, interconnectors, balancing, benefits

JEL Codes: D61 F15 L51 L94

Author links: David Newbery  

PDF: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1509.pdf

EPRG Paper Link: 1504

Open Access Link: https://doi.org/10.17863/CAM.5817