Cross-border interconnections : influence in the Spanish market price

Abstract

Cross-border interconnections represent a key infrastructure for the achievement of a common European energy market which ensures a fair price for consumers. Renewable sources also benefit from these infrastructures as enables the transmission of the locally generated energy to high demand areas. Additionally, new interconnections reinforce the security of supply of the system by the increase of the transmission capacity among regions. This thesis analyses the effect of the interconnection capacity increase between Spain and France in the Spanish day-ahead market by an econometric model. It pays special attention to the recently established interconnection between Santa Llogaia and Baixas on October 5, 2015, which increased the interconnection capacity between both countries, from 1400MW up to values close to 2800MW. Therefore, the effect on the market price as well as the market coupling and congestion periods is also studied. It has been observed a decrease in the Spanish market price of 3,54 e/MWh since the establishment of this infrastructure. The market coupling periods have increased from from 10,08% to 26,36%. Regarding to the cross-border congestions, it has been observed a reduction by 24,24% in the importing direction. However, it has been increased the number of congestion hours in the exporting direction by 26,87%, probably due to the unavailability of several French nuclear power plants during 2016. Based on the results depicted by the econometric model, it has been concluded that the new interconnection "Santa Llogaia-Baixas" could have contributed to increase the market coupling between France and Spain and reduced the cross-border congestions. Moreover, the Spanish prices has been reduced due to the increasing energy imports from France.