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A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives / Huanhuan Chen

Swansea University Author: Huanhuan Chen

  • E-Thesis – open access under embargo until: 14th May 2029

DOI (Published version): 10.23889/SUthesis.66482

Abstract

This thesis provides a thorough empirical analysis of the UK electricity market focusing on retail, wholesale, and imbalance prices. Chapter 2 reveals that the declined concentration pushed retail prices up while the cost of consumer-funded schemes raised prices. The results suggest that large suppl...

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Published: Swansea, Wales 2024
Institution: Swansea University
Degree level: Doctoral
Degree name: Ph.D
Supervisor: Li, Jinke ; O ‘Leary, Nigel ; Shao, Jing
URI: https://cronfa.swan.ac.uk/Record/cronfa66482
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spelling v2 66482 2024-05-20 A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives 1203d518c75756a9f5c4699cdeaa09b8 Huanhuan Chen Huanhuan Chen true false 2024-05-20 CBAE This thesis provides a thorough empirical analysis of the UK electricity market focusing on retail, wholesale, and imbalance prices. Chapter 2 reveals that the declined concentration pushed retail prices up while the cost of consumer-funded schemes raised prices. The results suggest that large suppliers raised retail prices due to higher indirect costs from decreased sales (market share). Still, competition from smaller suppliers limited the incumbent’s ability to increase prices and receive lower profit margins. This indicates that competition does not directly lower prices; instead, it affects the existing behaviours and pricing strategies within the retail electricity markets. In Chapter 3, the coexistence of Renewables Obligation and Contracts for Difference schemes for supporting wind farms creates a unique market scenario. This study shows that the wind generation supported by the Contracts for Difference scheme significantly decreases wholesale prices due to aggressive pricing, taking advantage of the scheme's design. This trend negatively impacts the profitability and competitiveness of Renewables Obligation supported wind farms. These insights highlight the need for policymakers to ensure a balanced approach that protects the interests of all market participants while fostering investor confidence. Chapter 4 explores the factors determining the high imbalance prices, motivated by large increases in imbalance prices since 2016. The results suggest that lower de-rated margins lead to higher imbalance prices, higher imbalance volumes correlate with increased imbalance prices, and rising intraday prices are linked to higher imbalance prices. Key findings indicate that imbalance price surges are linked to broader market trends rather than imbalances within the balancing market itself, suggesting potential regulatory adjustments and arbitrage opportunities. Keywords: Consumer-funded schemes; Market concentration; Indirect costs; Retail price; Contract for Difference; Renewable Obligation; Wholesale Electricity Prices; Aggressive pricing; Regulatory Risks; Imbalance Prices; Intraday Prices; Balancing Mechanism. E-Thesis Swansea, Wales Retail electricity price, Consumer-funded schemes; Market Concentration; Contracts for Difference; Renewables Obligation; Wholesale Electricity Prices; Policy Design; Aggressive pricing; Imbalance Prices; Intraday Prices 14 5 2024 2024-05-14 10.23889/SUthesis.66482 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University Li, Jinke ; O ‘Leary, Nigel ; Shao, Jing Doctoral Ph.D 2024-05-20T17:13:11.8759840 2024-05-20T16:47:44.6417204 Faculty of Humanities and Social Sciences School of Social Sciences - Economics Huanhuan Chen 1 Under embargo Under embargo 2024-05-20T16:57:15.3671162 Output 5635261 application/pdf E-Thesis – open access true 2029-05-14T00:00:00.0000000 Copyright: The Author, Huanhuan Chen, 2024. true eng
title A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives
spellingShingle A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives
Huanhuan Chen
title_short A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives
title_full A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives
title_fullStr A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives
title_full_unstemmed A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives
title_sort A Comprehensive Empirical Study of the UK Electricity Markets: Retail, Wholesale, and Balancing Perspectives
author_id_str_mv 1203d518c75756a9f5c4699cdeaa09b8
author_id_fullname_str_mv 1203d518c75756a9f5c4699cdeaa09b8_***_Huanhuan Chen
author Huanhuan Chen
author2 Huanhuan Chen
format E-Thesis
publishDate 2024
institution Swansea University
doi_str_mv 10.23889/SUthesis.66482
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Social Sciences - Economics{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Social Sciences - Economics
document_store_str 0
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description This thesis provides a thorough empirical analysis of the UK electricity market focusing on retail, wholesale, and imbalance prices. Chapter 2 reveals that the declined concentration pushed retail prices up while the cost of consumer-funded schemes raised prices. The results suggest that large suppliers raised retail prices due to higher indirect costs from decreased sales (market share). Still, competition from smaller suppliers limited the incumbent’s ability to increase prices and receive lower profit margins. This indicates that competition does not directly lower prices; instead, it affects the existing behaviours and pricing strategies within the retail electricity markets. In Chapter 3, the coexistence of Renewables Obligation and Contracts for Difference schemes for supporting wind farms creates a unique market scenario. This study shows that the wind generation supported by the Contracts for Difference scheme significantly decreases wholesale prices due to aggressive pricing, taking advantage of the scheme's design. This trend negatively impacts the profitability and competitiveness of Renewables Obligation supported wind farms. These insights highlight the need for policymakers to ensure a balanced approach that protects the interests of all market participants while fostering investor confidence. Chapter 4 explores the factors determining the high imbalance prices, motivated by large increases in imbalance prices since 2016. The results suggest that lower de-rated margins lead to higher imbalance prices, higher imbalance volumes correlate with increased imbalance prices, and rising intraday prices are linked to higher imbalance prices. Key findings indicate that imbalance price surges are linked to broader market trends rather than imbalances within the balancing market itself, suggesting potential regulatory adjustments and arbitrage opportunities. Keywords: Consumer-funded schemes; Market concentration; Indirect costs; Retail price; Contract for Difference; Renewable Obligation; Wholesale Electricity Prices; Aggressive pricing; Regulatory Risks; Imbalance Prices; Intraday Prices; Balancing Mechanism.
published_date 2024-05-14T17:13:10Z
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score 11.013619

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