Estimating benefits of market coupling in the EU

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26th April 2016

CEPA founder and Vice-Chairman David Newbery and CEPA Principal Ivan Viehoff, together with Imperial College Professor Goran Strbac, have published a paper estimating the benefits of market coupling in the EU electricity market. The paper, “The benefits of integrating European electricity markets” (Energy Policy, Volume 94, July 2016, Pages 253–263), finds that:

  • The benefits from day-ahead market coupling are €1 bn/yr.
  • Intra-day and balancing benefits could add a further €1.3 bn/yr.
  • Total benefits, including removing unscheduled flows and avoiding curtailment of renewables, could be as high as €3.4 bn/yr.
  • Sharing balancing and reserves is high priority as it accounts for a third of the total estimated benefits.
  • Rewarding interconnectors for all services provided reduces barriers to expansion.

The reader may also observe that the paper quotes a much larger estimate of the total benefits of fully integrating European electricity markets taken from the authors’ earlier work for the European Commission, thus implying that market coupling is only delivering a modest proportion of the total efficiency benefits which could be available if the EU electricity market were to be fully integrated, for example in the manner of the PJM market in the eastern USA.

The paper is now available (for a fee) here. An early draft of the paper is freely available here. If you are interested in discussing the findings of the paper or to obtain temporary access to the original Energy Policy article for a brief period, please contact the authors at ivan.viehoff@cepa.co.uk