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Trading Forward in the Brazilian Electricity Market

Year 2013, Volume: 3 Issue: 3, 272 - 287, 01.09.2013

Abstract

We study the interaction between forward and spot electricity markets in a scenario where buyers and sellers are price takers in the forward market and trade through marketers, who play a Cournot game. Our model’s main features come from the Brazilian electricity market, where a free contract market coexists with a regulated contract market, and the spot price is the output of a stochastic dynamic algorithm. We are able to show that the price of energy bought (sold) forward decreases (increases) with the number of marketers, and that, as a result, full hedging is achieved in the limit. We also investigate the effects on prices of changes in the number of market participants and in aggregate consumption and supply, an exercise that yields important policy recommendations for the Brazilian regulator.

Year 2013, Volume: 3 Issue: 3, 272 - 287, 01.09.2013

Abstract

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Details

Other ID JA34KT95MA
Journal Section Research Article
Authors

Paulo Cesar Coutinho This is me

Andre Rossi de Oliveira This is me

Publication Date September 1, 2013
Published in Issue Year 2013 Volume: 3 Issue: 3

Cite

APA Coutinho, P. C., & Oliveira, A. R. d. (2013). Trading Forward in the Brazilian Electricity Market. International Journal of Energy Economics and Policy, 3(3), 272-287.
AMA Coutinho PC, Oliveira ARd. Trading Forward in the Brazilian Electricity Market. IJEEP. September 2013;3(3):272-287.
Chicago Coutinho, Paulo Cesar, and Andre Rossi de Oliveira. “Trading Forward in the Brazilian Electricity Market”. International Journal of Energy Economics and Policy 3, no. 3 (September 2013): 272-87.
EndNote Coutinho PC, Oliveira ARd (September 1, 2013) Trading Forward in the Brazilian Electricity Market. International Journal of Energy Economics and Policy 3 3 272–287.
IEEE P. C. Coutinho and A. R. d. Oliveira, “Trading Forward in the Brazilian Electricity Market”, IJEEP, vol. 3, no. 3, pp. 272–287, 2013.
ISNAD Coutinho, Paulo Cesar - Oliveira, Andre Rossi de. “Trading Forward in the Brazilian Electricity Market”. International Journal of Energy Economics and Policy 3/3 (September 2013), 272-287.
JAMA Coutinho PC, Oliveira ARd. Trading Forward in the Brazilian Electricity Market. IJEEP. 2013;3:272–287.
MLA Coutinho, Paulo Cesar and Andre Rossi de Oliveira. “Trading Forward in the Brazilian Electricity Market”. International Journal of Energy Economics and Policy, vol. 3, no. 3, 2013, pp. 272-87.
Vancouver Coutinho PC, Oliveira ARd. Trading Forward in the Brazilian Electricity Market. IJEEP. 2013;3(3):272-87.