An investigation of bidding behaviour in the British electricity market

Completed

Other Power and Storage Technologies(Electricity transmission and distribution)
Other Cross-Cutting Technologies or Research(Environmental, social and economic impacts)

Basic and strategic applied research

SOCIAL SCIENCES (Economics and Econometrics)
SOCIAL SCIENCES (Business and Management Studies)

Sociological economical and environmental impact of energy (Policy and regulation)
Sociological economical and environmental impact of energy (Other sociological economical and environmental impact of energy)

Professor R Green
The Business School
University of Hull

Standard

ESRC

01 May 2004

30 April 2005

12 months

£35,210

No relevance to Underpinning Sectors

Yorkshire & Humberside

ESRC Electricity

Professor R Green, The Business School, University of Hull

Ms J Evans, Surrey Business School, University of Surrey

Objectives not supplied

The price of wholesale electricity in England and Wales fell by 40% between 1998 and 2002. This project will investigate two competing claims about the cause of this price fall. The first theory is that the reduction in prices was directly due to the introduction of a new set of market rules, the New Electricity Trading Arrangements (NETA). The second is that the reduction in prices was the direct result of a reduction in concentration in the ownership of power stations, rather thanthemarket rules, since prices fell before the rules changed. The choice between these theories has implications for the design of other electricity markets around the world, and for any future changes in Great Britain. The project will study the prices at which generators offered to sell power during the last two years of the Electricity Pool, the former wholesale market. These prices might have changed because the generators circumstances changed (they owned fewer plants) or because their strategies changed (they decided that it was better to let prices fall). If the changing circumstances explain the changing price offers, this would imply that the generators strategies did not change, and the new market rules had little direct impact on prices.

26/10/11