Facebook LinkedIn Youtube Twitter

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Electricity Demand in Wholesale Italian Market

In this paper we pursue two objectives: firstly we construct a theory based behavioral model of electricity demand in the Italian market; secondly we measure demand elasticity at hourly level, directly from consumer behavior. This is a novel approach providing the first attempt in the literature to estimate demand elasticity using individual demand bid data in the Italian Power Exchange (IPEX). Econometric estimation allows us to identify robust results, showing that elasticity varies significantly with: time of the day; day of the week; season of the year; pattern of line congestion; as well as according to the level of equilibrium price. This has meaningful policy implications: fostering more competition on the supply side could yield lower equilibrium prices and proportionately much higher quantities, for a lower offer curve shifted to the right would intersect a flatter portion of the demand curve. Keywords: Electricity market, Demand Elasticity, Heterogeneous consumers, Italy, System marginal Price

Download Executive Summary Purchase ( $25 )

JEL Codes: D44: Auctions, Q41: Energy: Demand and Supply; Prices, Q40: Energy: General, C70: Game Theory and Bargaining Theory: General, D12: Consumer Economics: Empirical Analysis, C72: Noncooperative Games, D47: Market Design

DOI: 10.5547/01956574.35.3.2

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.

Published in Volume 35, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.