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Electricity Demand in Wholesale Italian Market

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  • Simona Bigerna
  • Carlo Andrea BOLLINO

Abstract

In this paper we pursue two objectives: firstly we construct a theory based behavioral model of electricity demand in the Italian market; secondly we measure demand elasticity at hourly level, directly from consumer behavior. This is a novel approach providing the first attempt in the literature to estimate demand elasticity using individual demand bid data, in the Italian Power Exchange (IPEX). Econometric estimation allows us to identify robust results, showing that elasticity varies significantly with: time of the day; day of the week; season of the year; pattern of line congestion, as well as according to the level of equilibrium price. This has a policy implication: fostering more competition on the supply side could yield lower equilibrium prices and proportionately much higher quantities, for a lower offer curve, shifted to the right, would intersect a flatter portion of the demand curve.

Suggested Citation

  • Simona Bigerna & Carlo Andrea BOLLINO, 2012. "Electricity Demand in Wholesale Italian Market," Quaderni del Dipartimento di Economia, Finanza e Statistica 108/2012, Università di Perugia, Dipartimento Economia.
    • Handle: RePEc:pia:wpaper:108/2012
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    Cited by:

    1. Tarek Atalla & Simona Bigerna & Carlo Andrea Bollino, 2018. "Energy demand elasticities and weather worldwide," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(1), pages 207-237, April.
    2. Simona Bigerna and Carlo Andrea Bollino, 2016. "Optimal Price Design in the Wholesale Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    3. Bigerna, Simona & Bollino, Carlo Andrea, 2016. "Ramsey prices in the Italian electricity market," Energy Policy, Elsevier, vol. 88(C), pages 603-612.
    4. Carlo Andrea Bollino & Maria Chiara D’Errico, 2022. "Electricity Demand Elasticity, Mobility, and COVID-19 Contagion Nexus in the Italian Day-Ahead Electricity Market," Energies, MDPI, vol. 15(20), pages 1-26, October.
    5. Maria Chiara D'Errico & Carlo Andrea Bollino, 2015. "Bayesian Analysis of Demand Elasticity in the Italian Electricity Market," Sustainability, MDPI, vol. 7(9), pages 1-22, September.
    6. Di Leo, Simone & Chicca, Marta & Daraio, Cinzia & Guerrini, Andrea & Scarcella, Stefano, 2024. "A robust benchmarking of direct margin in Italy's energy retail markets," Utilities Policy, Elsevier, vol. 86(C).
    7. José M. Labeaga & Xavier Labandeira & Xiral López-Otero, 2018. "Energy Tax Reform and Poverty Alleviation in Mexico," Working Papers 1801, Universidade de Vigo, Departamento de Economía Aplicada.
    8. Brännlund, Runar & Vesterberg, Mattias, 2021. "Peak and off-peak demand for electricity: Is there a potential for load shifting?," Energy Economics, Elsevier, vol. 102(C).
    9. James W. Mjelde & Kannika Duangnate, 2023. "Overview of Committed Quantities in Commodity Demand Analysis with a Focus on Energy," Energies, MDPI, vol. 16(11), pages 1-17, May.
    10. Spindler, Christian & Woll, Oliver & Schober, Dominik, 2018. "Sharing is not caring: Backward integration of consumers," ZEW Discussion Papers 18-006, ZEW - Leibniz Centre for European Economic Research.
    11. Concettini, Silvia & Creti, Anna & Gualdi, Stanislao, 2022. "Assessing the regional redistributive effect of renewable power production through a spot market algorithm simulator: The case of Italy," Energy Economics, Elsevier, vol. 114(C).
    12. Rowland, Christopher S. & Mjelde, James W. & Dharmasena, Senarath, 2017. "Policy implications of considering pre-commitments in U.S. aggregate energy demand system," Energy Policy, Elsevier, vol. 102(C), pages 406-413.
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    14. Cullen, Joseph A. & Reynolds, Stanley S., 2023. "Market dynamics and investment in the electricity sector," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    15. Matar, Walid & Anwer, Murad, 2017. "Jointly reforming the prices of industrial fuels and residential electricity in Saudi Arabia," Energy Policy, Elsevier, vol. 109(C), pages 747-756.
    16. Simona Bigerna and Carlo Andrea Bollino, 2015. "A System Of Hourly Demand in the Italian Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    17. Maria Chiara D'errico, 2020. "Demand Elasticity in the Italian Power Market: a Bayesian Experiment under dual pricing scheme," Review of Economics and Institutions, Università di Perugia, vol. 11(1-2).
    18. Bigerna, Simona & Andrea Bollino, Carlo & Polinori, Paolo, 2015. "Marginal cost and congestion in the Italian electricity market: An indirect estimation approach," Energy Policy, Elsevier, vol. 85(C), pages 445-454.
    19. Simona Bigerna & Carlo Andrea BOLLINO, 2013. "Hourly Electricity Demand in Italian Market," Quaderni del Dipartimento di Economia, Finanza e Statistica 121/2013, Università di Perugia, Dipartimento Economia.

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