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PhD defence on the Norwegian electricity market
Lise ThoenFriday January 27. Faisal Mirza will defend his PhD thesis on the Norwegian electricity market.
He has studied consumption, price asymmetries, transmission congestion and market power in the Norwegian electricity market
Faisal Mirza, PhD student Handelshøgskolen ved UMB/IØR
Photo: Håkon Sparre
Friday January 27. 2012 at 12.15
Tower building UMB, TU 101
UMB School of Economics and Business/Department of Economics and Resource Management.
The title of the trial lecture will be:
Congestion handling in networks: How to best achieve competition in the market?
Short summary of the findings in the PhD thesis
The results from this dissertation add to the ongoing debate in Norway if NordPool spot should shift from zonal price scheme to the nodal price scheme. Academically, the individual papers provide a number of theoretical frameworks that are helpful in analyzing electricity markets around the world.
The PhD dissertation investigates price determination process in the Norwegian electricity market and evaluates if the market works at perfectly competitive level or producers exercise market power to drive prices away from their marginal cost of production. Using aggregate hourly electricity supply and demand data, the empirical analysis carried out in this dissertation leads to the following conclusions.
1. Market power at the generation level is not a major problem for the Norwegian electricity market. On average, when we consider the events of binding transmission capacity as exogenous, the average markup in economic terms is small and has not exceeded one percent.
2. Producers can use the information on available transmission capacity between different price areas in Norway and restrict their output to induce transmission congestion in their price area to exercise market power. Average markup during such instances has remained high at 20 percent.
3. Transmission capacity in Norway is not being optimally utilized as import capacity remains at its lowest level during the hours when southern Norway is generally a net importer of electricity, when compared to the rest of the hours of the day.
4. A segment of electricity retailers in the Norwegian electricity market exercises its market power by controlling the pass-through of price changes in the wholesale market to the retail market for variable price contract consumers. The pass-through is asymmetric, whereby cost increase is transmitted completely and quickly when compared to the case of cost decrease.
5.The Daylight saving time (Summer time) policy is helpful in ensuring energy efficiency. It results in electricity saving of at least 1.0 percent in both Norway and Sweden corresponding to an hourly saving of 103 and 175 MWh in Norway and Sweden respectively.
Supervision and evaluation committee
Associate Professor Olvar Bergland has been Mirza’s main supervisor and Researcher Eirik Romstad has been his co-supervisor, both from UMB School of Economics and Business.
The members of the evaluation committee are:
Professor Fridrik Baldursson, School of Business, Reykjavik University, Iceland
Professor Frode Steen, Norwegian School of Economics, NHH, Norway
Associate Professor Marie Steen, Dep. Of Economics and Resource Management, UMB, Norway
The doctoral thesis is available for public review at the UMB library.
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Updated: 25.01.12
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Tel: +47 6496 5700 | Fax: +47 6496 5701 | E-mail: ior(at)umb.no
Visiting address: Tårnbygningen (Map UMB building no.31)