Electricity Traffic Over the Barriers of Networks: The Case of Germany and the Netherlands

20 Pages Posted: 13 Jun 2010

See all articles by Hans Andeweg

Hans Andeweg

EDF Trading Ltd.

Andre B. Dorsman

Vrije Universiteit Amsterdam, School of Business and Economics

Kees van Montfort

Nyenrode University

Date Written: October 1, 2009

Abstract

Since the electricity market was liberalized at the end of the last century, the authorities no longer fix prices, and there is now a variable price determined by the market. Every system has its own price-forming process. However, these systems are not completely isolated. It is possible to have a restricted measure of electricity traffic between the systems. This article describes a value-creating trade strategy on the basis of the prices of electricity in The Netherlands and Germany, making use of the restricted electricity traffic between the two countries, providing empirical evidence on exploitable pricing inefficiencies in the electricity markets and potential trading strategies based thereupon. This research has not been conducted before and will provide a better understanding of the interaction between separate electricity markets.

Keywords: Efficient markets, Electricity markets, Electricity traffic, Trade strategy

JEL Classification: G14

Suggested Citation

Andeweg, Hans and Dorsman, Andre B. and van Montfort, Kees, Electricity Traffic Over the Barriers of Networks: The Case of Germany and the Netherlands (October 1, 2009). Frontiers in Finance and Economics, Vol. 6, No. 2, pp. 120-139, 2009, Available at SSRN: https://ssrn.com/abstract=1623655

Hans Andeweg

EDF Trading Ltd. ( email )

Netherlands

Andre B. Dorsman (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Kees Van Montfort

Nyenrode University ( email )

3621 BG Breukelen
Netherlands

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