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Electricity market integration and the impact of unilateral policy reforms

Author

Listed:
  • Luigi Grossi
  • Sven Heim
  • Kai Hüschelrath
  • Michael Waterson

Abstract

We investigate the impact that two German energy reforms—phase-out of nuclear power plants after the Fukushima incident and expansion of renewables due to fixed feed-in tariffs—had on neighbouring countries’ consumers. The unilateral German reforms generated substantial negative and positive impacts, respectively, in neighbouring countries with the highest overall effect of German policy found in France, not Germany; an annual negative impact on consumers of €3.15 billion. We also find significant differences in market integration between neighbouring countries by calculating ratios between the estimated policy decisions’ impacts before and after controlling for interconnector congestion.

Suggested Citation

  • Luigi Grossi & Sven Heim & Kai Hüschelrath & Michael Waterson, 2018. "Electricity market integration and the impact of unilateral policy reforms," Oxford Economic Papers, Oxford University Press, vol. 70(3), pages 799-820.
    • Handle: RePEc:oup:oxecpp:v:70:y:2018:i:3:p:799-820.
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    Cited by:

    1. Davide Ciferri & Maria Chiara D’Errico & Paolo Polinori, 2020. "Integration and convergence in European electricity markets," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(2), pages 463-492, July.
    2. Klaus Gugler & Adhurim Haxhimusa, 2016. "Cross-Border Technology Differences and Trade Barriers: Evidence from German and French Electricity Markets," Department of Economics Working Papers wuwp237, Vienna University of Economics and Business, Department of Economics.
    3. Hellwig, Michael & Schober, Dominik & Woll, Oliver, 2020. "Measuring market integration and estimating policy impacts on the Swiss electricity market," Energy Economics, Elsevier, vol. 86(C).
    4. Rubanda, Muhumuza Ezra & Senyonga, Livingstone & Ngoma, Mohammed & Adaramola, Muyiwa S., 2023. "Energy market integration: Harmonizing tariff recourse policies in East Africa," Utilities Policy, Elsevier, vol. 84(C).
    5. Haxhimusa, Adhurim, 2018. "The Effects of German Wind and Solar Electricity on French Spot Price Volatility: An Empirical Investigation," Department of Economics Working Paper Series 258, WU Vienna University of Economics and Business.
    6. Luigi Grossi & Mauro Mussini, 2017. "Inequality in Energy Intensity in the EU-28: Evidence from a New Decomposition Method," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    7. Gugler, Klaus & Haxhimusa, Adhurim, 2016. "Cross-Border Technology Differences and Trade Barriers: Evidence from German and French Electricity Markets," Department of Economics Working Paper Series 237, WU Vienna University of Economics and Business.
    8. Do, Hung Xuan & Nepal, Rabindra & Pham, Son Duy & Jamasb, Tooraj, 2024. "Electricity market crisis in Europe and cross border price effects: A quantile return connectedness analysis," Energy Economics, Elsevier, vol. 135(C).
    9. Sikorska-Pastuszka, Magdalena & Papież, Monika, 2023. "Dynamic volatility connectedness in the European electricity market," Energy Economics, Elsevier, vol. 127(PA).
    10. Halužan, Marko & Verbič, Miroslav & Zorić, Jelena, 2022. "An integrated model for electricity market coupling simulations: Evidence from the European power market crossroad," Utilities Policy, Elsevier, vol. 79(C).
    11. Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "EU electricity market integration and cross-country convergence in residential and industrial end-user prices," Energy Policy, Elsevier, vol. 165(C).
    12. repec:ags:aaea22:335434 is not listed on IDEAS
    13. Gugler, Klaus & Haxhimusa, Adhurim, 2019. "Market integration and technology mix: Evidence from the German and French electricity markets," Energy Policy, Elsevier, vol. 126(C), pages 30-46.
    14. Sousa, Joana & Soares, Isabel, 2020. "Demand response, market design and risk: A literature review," Utilities Policy, Elsevier, vol. 66(C).
    15. Silvia Golia & Luigi Grossi & Matteo Pelagatti, 2022. "Machine Learning Models and Intra-Daily Market Information for the Prediction of Italian Electricity Prices," Forecasting, MDPI, vol. 5(1), pages 1-21, December.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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