Completed Projects
In many countries, producers receive financial compensation for maintaining reserve capacity on the grid. The purpose is to avoid scarcity events during which either the price of electricity becomes e…
European day-ahead markets for electricity apply zonal pricing. Prices are then allowed to differ across zones because of network congestion, but are the same within each zone. In the real-time market…
Around the turn of the millennium, a wave of privatizations in the Swedish electricity distribution sector lead to an increase in ownership concentration. In this project, Erik Lundin analyzes the per…
Erik Lundin and Thomas Tangerås analyze market performance on the Nordic Power exchange, Nord Pool. The null hypothesis of prefect competition is rejected in all specifications. Results show that pro…
Sara Fogelberg and Ewa Lazarczyk apply a quasi-experimental design and use data from the Swedish energy market to examine whether generation companies use reported production failures to disguise stra…
Within a theoretical framework, Thomas Tangerås and Johannes Mauritzen analyze the link between real-time and day-ahead market performance in a hydro-based wholesale electricity market. The marginal c…
In this paper, Pär Holmberg and Frank A. Wolak analyse how market design influences bidding behaviour in electricity markets with cost uncertainties. They show that competition improves for increased…
Storage possibilities are usually limited in electric power systems; supply and demand need to balance almost instantly. This research paper demonstrates that as a consequence, network bottlenecks cre…
The price of electricity increased substantially at the start of the millenium in Sweden. Shon Ferguson and Mark Sanctuary show in a new research paper how increased electricity costs caused Swedish m…
This paper analyzes the effect of transmission constraints and tariffs on outcomes in a discriminatory-price electricity auctions. With point of connection tariffs, which are used in the majority of t…
This paper develops a stylized model of cross-border balancing to show that cooperation among system operators can reduce system costs. The gains of cooperation increase with cost asymmetries and decr…
The paper examines countries’ unilateral incentives to achieve supply security through capacity reserves and market integration in a multinational electricity market. Such policies have become increas…
Price instability means that producers change the price of their production drastically with small cost changes, for example minor changes in fuel prices. In this article we develop a theoretical mode…
The authors construct a model of strategic behavior in sequential markets which exhibits a persistent forward price premium. Purchasers are willing to pay a premium for forward contracts because produ…
The energy system in the Nordic countries faces changes driven by increasing integration with the rest of Europe and changes to the generation mix. These developments pose challenges with respect to f…
Power exchanges need to specify rationing rules for cases when there is excess supply at the market clearing price. In this new research paper Pär Holmberg introduces a rationing rule that results in…
Wind power generation of electricity has gained popular support because of its low environmental impact and its low costs relative to other renewable energy sources. However, concerns have been raised…
This research paper studies the impact of market specific news, called urgent market messages, on the price differences between the day-ahead market, Elspot, and the intra-day market, Elbas, on the No…
Studies have shown that many consumers and businesses fail to invest in energy efficiency improvements despite seemingly ample financial incentives to do so – the so-called energy efficiency gap or pa…
This research paper demonstrates how suppliers can take strategic speculative positions in derivative markets to soften competition in the spot market. This type of strategic speculation increases the…
This research paper proposes nuclear capacity auctions as a means to improve the incentives for investing in nuclear power. A properly designed auction would (1) allocate the license to the most effic…
Thomas Tangerås analyzes renewable electricity policy in a multinational electricity market with transmission investment. If national policy makers choose support schemes to maximize domestic welfare,…
Johannes Mauritzen examines Danish wind power for the period 2010-2012 and reveals that wind power producers covered production deficits by increased participation at the short term market, Elbas, whi…
Wholesale electricity markets use different market designs to handle congestion in the transmission network. This paper compares nodal, zonal and discriminatory pricing in general networks with transm…
The most common reason for scrapping a wind turbine in Denmark is to make room for a newer turbine. The decision to scrap a wind turbine is then highly dependent on an opportunity cost that comes from…
In most wholesale electricity markets generators must submit step-function offers of supply to a uniform price auction, and the market is cleared at the price of the most expensive offer needed to mee…
Sweden has decided to increase electricity production from renewable energy sources such as wind, water and biofueled thermal power. Green certificates are the primary support system for renewable ele…
Using the concept of market-distribution functions, we derive general optimality conditions for discriminatory divisible-good auctions, which are also applicable to Bertrand games and non-linear prici…
It is well established that hydro power can act as a complement to large amounts of intermittent energy. In particular, hydro power can act as a "battery" where large amounts of wind power are install…
Wind power has become an increasingly important source of electricity production around the world. Wind power is a volatile source of energy as it only delivers power when the wind blows. Hence, addit…
The capacity of the transmission network determines the extent of integration of a multi-national energy market. Cross-border externalities render coordination of network maintenance and investments a…
Forward sales is a credible commitment to aggressive spot market bidding, and it mitigates producers’ market power in electricity markets. Still it can be profitable for a producer to make such a comm…
The supply function equilibrium provides a game-theoretic model of strategic bidding in oligopolistic wholesale electricity auctions. This paper presents an intuitive account of current understanding…
Institutional and political characteristics affect the extent to which the real exchange rates of oil-exporting countries co-move with the oil price. In a simple theoretical model, good governance ins…
In this paper we review the recent empirical research concerning market power on the Nordic wholesale market for electricity, Nord Pool. There is no evidence of blatant and systematic exploitation of…
The intention of the pay-as-bid auction, as used in the electricity market of Great Britain, is to lower prices. This paper characterizes supply function equilibria (SFE) in pay-as-bid auctions and co…
Electricity distribution networks are natural monopolies and thus unsuitable for deregulation. However, the regulator can simulate market conditions by rewarding networks according to their performanc…
In electricity auctions producers submit supply functions specifying the amount they are willing to produce at various prices. In Supply Function Equilibrium (SFE), every firm commits to the supply fu…
This paper presents an algorithm for solving the equilibria of an electricity auction where producers submit supply functions. The paper includes an example based on the electricity market in England…
In this research paper, Ewa Lazarczyk conducts an empirical investigation of market participants’ reactions to news about sudden production and transmission failures on the electricity grid - so-calle…
Europe's electricity markets set prices based on electricity areas. As a result, the price is set differently on the spot market compared to when it is delivered. Such differences can give rise to arb…
The electricity markets are becoming increasingly integrated. The price of electricity is therefore increasingly due to limitations in the electricity grid and transmission costs. In this research rep…
European wholesale electricity markets apply zonal pricing. As a consequence, the price is determined in a certain way at the day-ahead market and a different way at the real-time market, which genera…
Mario Blázquez de Paz analyzed the effects of investments in transmission and production capacity on consumer welfare and suppliers’ profits. In the specific context of the model, consumer welfare was…