Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Egg-Timer: Electricity Markets and Energy Systems Location: D-110 Session Chair: Yuxin Kang, Duke Univeristy | |
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Intermittency and Market Power DIW Berlin, Technical University Berlin Electricity markets operate through a sequence of forward and spot markets in which firms commit to positions under uncertainty. The rapid expansion of renewable energy, supported by government policies, has increased uncertainty about residual demand realizations and, in turn, affects firms' forward coverage. This paper studies how one-year-ahead forecast errors in residual demand affect the exercise of market power in day-ahead electricity markets. Using data from the German electricity market, we examine how unexpected changes in residual demand translate into day-ahead electricity prices. We find that positive residual demand shocks—such as those arising from overestimated renewable generation—lead to higher day-ahead prices. The evidence is consistent with reduced effective forward coverage, which weakens the disciplining role of forward markets and expands the scope for strategic pricing in the day-ahead market. These results highlight a novel empirical channel through which renewable intermittency and forecast uncertainty shape market power, with important implications for electricity market design during the energy transition. | |