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Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 02 de 2011


Application of a Estrutural Model to a Wholesale Electricity Market:

The Spanish Market from January 1999 to June 2007

Vítor Marques
Entidade Reguladora dos Serviços Energéticos

Adelino Fortunato
Universidade de Coimbra

Isabel Soares
Universidade do Porto

The aim of this work is to analyse the agents’ behaviour in highly concentrated and strongly regulated electricity wholesale markets with rigid demand. In order to accomplish this aim, the analysis was based on the former Spanish electricity generation market, between January 1999 and June 2007, before the MIBEL (Iberian Electricity Market) has started. The analysis is carried out in the theoretical framework of the structural models. The result of the structural model supports the apparently competitive nature of the market analysed for the period 1999 to 2003, despite than fact that the Lerner index average was high during this period. It will therefore be important in future work to analyse whether the high average mark-up verified accords with the CTCs (stranded costs compensation which have the characteristics of contracts for difference) which frame the activities of the electricity producers.

JEL Classification: L13.

electricity market, rigid demand, structural model, market power.

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