ELECTRICITY PRICES DIFFERENTIATION IN THE EUROPEAN SPACE

Abstract

The electricity markets liberalization is aimed at obtaining significant benefits by consumers through reducing electricity prices under the pressure of competition. European electricity markets have been particularly developed due to unification of organized spot trading rules. Now in the EU, day-ahead markets are the most progressive trading form, and day-ahead prices are the most transparent, indicative and comparable on the European space. However, price differentiation of EU electricity markets remains quite high. The purpose of the article is to determine the reasons for the electricity prices differentiation in the European space. The methodological basis of the research was the industrial markets theory, and methods of descriptive statistics and cluster analysis were used for investigation. The article presents analytical support to determine the reasons of the price differentiation in the EU electricity markets, the main of which are internal generation structure and openness of national markets to foreign trading. It is proved that the decisive factor of price differentiation is the structure of the electricity supply, while as the internal generation structure can significantly affect the electricity prices in сase of market isolation. The presented research in the article allows drawing practical conclusions about the electricity prices differentiation in the EU: export-oriented electricity markets tend to have cheaper electricity for inland consumption, generating expensive production surpluses for foreign markets, while the price of electricity in imported-oriented ones is not always been the highest and depends on the development of ties with adjacent markets. Internal sufficiency does not guarantee low electricity prices in the national market; focus on nuclear and hydro generation contributes to decreasing electricity prices. At the same time, other generating sources are also important, as a marginal unit will determine the overall dynamics of electricity prices; the predominance in the structure of the coal generation does not mean a sharp increase in electricity prices compared to low-carbon national markets - it will be determined the price level by the foreign trading volumes to ensure efficient loading of coal generating capacity; gas-oriented internal electricity markets have the highest electricity prices, which is only possible to reduce through foreign trading.