arXiv subjects

Clemens Stiewe

Publications and source records attributed to Clemens Stiewe.

3 recordsLinked to original sources

arXiv2026

Arbitrage and rents in European long-term transmission rights

Long-term transmission rights (LTTRs) are designed to support hedging in interconnected European electricity markets. LTTR auction prices have historically fallen short of forward market prices, signaling limited arbitrage. This paper studies the interaction of transmission rights and forward markets. Option pricing theory predicts that LTTR holders take short forward positions in importing markets and long forward positions in exporting markets to lock in arbitrage profits. Empirically, I find a corresponding price effect in the German electricity forward market immediately after LTTR auctions, using panel regression on EEX futures contracts traded between 2018 and 2025. This shows that LTTR holders can achieve systematic rents, indicating an inefficient regulatory intervention and a transfer from consumers to LTTR holders.

econ.GN↗

arXiv2026

Competitive effects of transmission constraints in the German electricity market

This paper estimates the effect of cross-border transmission constraints on suspected market power abuse in the German wholesale electricity market. Using a 2SRI instrumental variables approach, we study suspected strategic behavior by German gas- and coal-fired power plants in 2022-2024. Cross-border transmission constraints are measured using the maximum and minimum bounds of zonal net position, while suspected market power abuse is measured as the upward or downward deviation of observed dispatch from a modeled competitive benchmark. We find that transmission constraints significantly elevate the likelihood of suspected market power abuse. When headroom for further imports is already scarce, reducing import headroom by one Gigawatt (GW) increases the odds of suspected capacity withholding by 15%. Similarly, reducing export headroom by one GW when it is scarce increases the odds of suspected capacity push-in, a strategy to depress prices, by 16%. These results provide empirical support for interconnection expansion as an instrument to mitigate market power.

econ.GN↗

arXiv2024

Cross-border cannibalization: Spillover effects of wind and solar energy on interconnected European electricity markets

The average revenue, or market value, of wind and solar energy tends to fall with increasing market shares, as is now evident across European electricity markets. At the same time, these markets have become more interconnected. In this paper, we empirically study the multiple cross-border effects on the value of renewable energy: on one hand, interconnection is a flexibility resource that allows to export energy when it is locally abundant, benefitting renewables. On the other hand, wind and solar radiation are correlated across space, so neighboring supply adds to the local one to depress domestic prices. We estimate both effects, using spatial panel regression on electricity market data from 2015 to 2023 from 30 European bidding zones. We find that domestic wind and solar value is not only depressed by domestic, but also by neighboring renewables expansion. The better interconnected a market is, the smaller the effect of domestic but the larger the effect of neighboring renewables. While wind value is stabilized by interconnection, solar value is not. If wind market share increases both at home and in neighboring markets by one percentage point, the value factor of wind energy is reduced by just above 1 percentage points. For solar, this number is almost 4 percentage points.

econ.EM↗