May 16, 2011 - Mar 31, 2013
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By using the data of spot power transaction in Japan Electric Power Exchange (JEPX) and the auction data of public power procurements, this project aims at developing empirical frameworks with which we examine how the exogenous shocks such as disasters, the rise in oil prices, and the changes in the market structure affect power trading. As electricity is difficult to be stored economically, spot prices of electricity tend to move up and down, with occasional price spikes. In addition to the exogenous shocks such as sudden changes in weather conditions and unexpected accidents of power plants, market power of the large incumbent utilities significantly affects power prices. Moreover, since the capacity of the interconnection transmission line (frequency converters) between the eastern and western regions in Japan is very limited, transmission congestion leads to the price differences between the two regions. Considering these market characteristics, this project investigates vertically-interconnected spot and retail power markets in a consistent framework.