Engineering
4 years ago

Electricity spot market power drives up hedge prices, impacting consumers.

RePEc: Research Papers in Economics
Can market power in the electricity spot market translate into market power in the hedge market
Gabriel Fiuza de Bragança, Toby Daglish

Paper Summary

Electricity prices can be influenced by market power in both the spot and hedge markets. A study found that companies with market power in the spot market can also impact prices in the hedge market. The researchers used a model to show how spot market power can lead to higher forward prices. This means that the prices you pay for electricity in the future could be affected by how much power companies have in the current market.

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