Impacts of unilateral capacity remunerative mechanisms on cross-border electricity trade
by Olga Gore; Satu Viljainen; Kalevi Kyläheiko; Ari Jantunen
International Journal of Business Innovation and Research (IJBIR), Vol. 8, No. 6, 2014

Abstract: This paper focuses on the impacts of capacity remunerative mechanisms (CRMs) on electricity cross-border trade. As an example case, we focus on the cross-border electricity trade between the Nordic and Russian electricity markets. These two markets have distinctively different market designs. The Nordic market is an energy-only market that rewards the electricity generators for the output they produce. The Russian market rewards generators for the output and availability of electricity generation. We analyse the prospects for the cross-border electricity trade between the two markets. Our findings suggest that the different market designs notably reduce the cross-border electricity trade between the two markets and also have significant impacts on the distribution of welfare amongst the consumers and producers. These results have significant implications because many European countries are currently considering unilateral CRMs. An obvious threat is that the particularly uncoordinated CRMs cause impediments to the cross-border electricity trade, and result in inefficient use of the interconnectors. Such a development could severely hinder the achievement of the internal electricity market in Europe.

Online publication date: Fri, 31-Oct-2014

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Business Innovation and Research (IJBIR):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email