| ID | 150346 |
| Title Proper | Ramsey prices in the Italian electricity market |
| Language | ENG |
| Author | Simona Bigerna, Carlo Andrea Bollino ; Bigerna, Simona ; Bollino, Carlo Andrea |
| Summary / Abstract (Note) | In this paper, we derive optimal zonal prices in the Italian day-ahead electricity market using estimation of a complete system of hourly demand in 2010–2011. In Italy, the hourly equilibrium price for all buyers is computed as a uniform average of supply zonal prices, resulting from market splitting due to line congestion. We model ex-ante individual bids expressed by heterogeneous consumers, which are distinguished by geographical zones. Using empirical estimations, we compute demand elasticity values and new zonal prices, according to a Ramsey optimal scheme. This is a new approach in the wholesale electricity market literature, as previous studies have discussed the relative merit of zonal prices, considering only the issue of line congestion. Our results show that the optimal pricing scheme can improve welfare in the day-ahead Italian electricity market, with respect to both the existing uniform price scheme and the proposal to charge the existing supply zonal prices to the demand side. |
| `In' analytical Note | Energy Policy Vol. 88, No.88; Jan 2016: p.603–612 |
| Journal Source | Energy Policy 2016-01 88, 88 |
| Key Words | Electricity Markets ; Demand Elasticity ; Heterogeneous Consumers’ Behavior ; Zonal Prices ; Optimal Ramsey Prices |