Quotation Gugler, Klaus and Haxhimusa, Adhurim and Liebensteiner, Mario. 2016. Integration of European Electricity Markets: Evidence from Spot Prices. International Symposium of Energy and Finance Issues (ISEFI), Paris, Frankreich, 24.03.-25.03.




This paper seeks to investigate the current state of market integration among European electricity day-ahead spot prices. On theoretical grounds we show that market integration brings about benefits, such as lower average prices and increased welfare from allocative efficiency. Yet, price convergence leads to higher prices in the low-price market and to lower prices in the high-price market, which creates winners and losers and thus makes the political implementation of market integration cumbersome. In our empirical analysis, we utilize a large sample of hourly spot prices of 25 European markets for the period 01.01.2010–30.06.2015 and combine it with other relevant data such as interconnector capacity and market coupling. Firstly, empirical results from cointegration analysis indicate that integration increased from 2010–2012 but then declined until 2015, most likely due to increased feed-in from intermittent renewables. Secondly, we empirically assess the speed of adjustment from price shocks and reach the conclusion that the efficiency of integration is rather modest. In general, integration among European electricity markets has a large potential for improvements from additional capacity investments and further promotion of market coupling.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title Integration of European Electricity Markets: Evidence from Spot Prices
Event International Symposium of Energy and Finance Issues (ISEFI)
Year 2016
Date 24.03.-25.03.
Country France
Location Paris


Gugler, Klaus (Details)
Haxhimusa, Adhurim (Former researcher)
Liebensteiner, Mario (Former researcher)
Department of Economics (Gugler) (Details)
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