Electricity market integration and impact of renewable energy sources in the Central Western Europe region: Evolution since the implementation of the Flow-Based Market Coupling mechanism Articles uri icon

publication date

  • November 2022

start page

  • 1768

end page

  • 1788

volume

  • 8

International Standard Serial Number (ISSN)

  • 2352-4847

abstract

  • The wholesale electricity markets in Europe are undergoing major changes. The pursuit of a major integration for the development of the Internal Energy market is the main driver of this transformation. In this context, the Central Western Europe region implemented for the first time in May 2015 a new and complex mechanism to manage cross-border capacity allocation in the frame of the day-ahead market: the Flow-Based Market Coupling. This paper is the first to consider recent data of the electricity market to develop a predictive model for identifying convergence and congestion situations in the Central Western Europe region. The occurrence of convergence or not is considered as a binary outcome to build a probit model. This model combines meaningful information about the electricity market features of the interconnected countries between 2016 and 2018, including for the first time data on renewable energy sources forecasts for this type of studies. The results of this study identify the major role that Germany and France play in the integration process. The estimated coefficients of the model show that the strong development of solar and wind power in Germany appears as an important driver of congestion in the Central Western Europe. In order to improve the benefits of market integration and the further development of the Internal Energy market, the results of this study encourage policy-makers to promote cooperation and coordination among all the actors involved in the electricity market and to pursue the expansion of the power grid to minimize the occurrence of congestion situations.

subjects

  • Computer Science

keywords

  • central western europe region; european electricity market; flow-based market coupling; market integration; renewables