TY - RPRT A1 - Xu, Alice Lixuan A1 - Sánchez Canales, Jorge A1 - Fusar Bassini, Chiara A1 - Kaack, Lynn H. A1 - Hirth, Lion T1 - Market power abuse in wholesale electricity markets N2 - In wholesale electricity markets, prices fluctuate widely from hour to hour and electricity generators price-hedge their output using longer-term contracts, such as monthly base futures. Consequently, the incentives they face to drive up the power prices by reducing supply has a high hourly specificity, and because of hedging, they regularly also face an incentive to depress prices by inflating supply. In this study, we explain the dynamics between hedging and market power abuse in wholesale electricity markets and use this framework to identify market power abuse in real markets. We estimate the hourly economic incentives to deviate from competitive behavior and examine the empirical association between such incentives and observed generation patterns. Exploiting hourly variation also controls for potential estimation bias that do not correlate with economic incentives at the hourly level, such as unobserved cost factors. Using data of individual generation units in Germany in a six-year period 2019-2024, we find that in hours where it is more profitable to inflate prices, companies indeed tend to withhold capacity. We find that the probability of a generation unit being withheld increases by about 1 % per euro increase in the net profit from withholding one megawatt of capacity. The opposite is also true for hours in which companies benefit financially from lower prices, where we find units being more likely to be pushed into the market by 0.3 % per euro increase in the net profit from capacity push-in. We interpret the result as empirical evidence of systematic market power abuse. Y1 - 2025 U6 - https://doi.org/10.48550/arXiv.2506.03808 PB - arXiv ER - TY - RPRT A1 - Fusar Bassini, Chiara A1 - Xu, Alice Lixuan A1 - Sánchez Canales, Jorge A1 - Hirth, Lion A1 - Kaack, Lynn T1 - Revealing the empirical flexibility of gas units through deep clustering N2 - The flexibility of a power generation unit determines how quickly and often it can ramp up or down. In energy models, it depends on assumptions on the technical characteristics of the unit, such as its installed capacity or turbine technology. In this paper, we learn the empirical flexibility of gas units from their electricity generation, revealing how real-world limitations can lead to substantial differences between units with similar technical characteristics. Using a novel deep clustering approach, we transform 5 years (2019-2023) of unit-level hourly generation data for 49 German units from 100 MWp of installed capacity into low-dimensional embeddings. Our unsupervised approach identifies two clusters of peaker units (high flexibility) and two clusters of non-peaker units (low flexibility). The estimated ramp rates of non-peakers, which constitute half of the sample, display a low empirical flexibility, comparable to coal units. Non-peakers, predominantly owned by industry and municipal utilities, show limited response to low residual load and negative prices, generating on average 1.3 GWh during those hours. As the transition to renewables increases market variability, regulatory changes will be needed to unlock this flexibility potential. Y1 - 2025 U6 - https://doi.org/10.48550/arXiv.2504.16943 PB - arXiv ER - TY - RPRT A1 - Fusar Bassini, Chiara A1 - Xu, Alice Lixuan A1 - Sánchez Canales, Jorge A1 - Hirth, Lion A1 - Kaack, Lynn H. T1 - Flexibility of German gas-fired generation: evidence from clustering empirical operation N2 - A key input to energy models are assumptions about the flexibility of power generation units, i.e., how quickly and often they can start up. These assumptions are usually calibrated on the technical characteristics of the units, such as installed capacity or technology type. However, even if power generation units technically can dispatch flexibly, service obligations and market incentives may constrain their operation. Here, we cluster over 60% of German national gas generation (generation units of 100 MWp or above) based on their empirical flexibility. We process the hourly dispatch of sample units between 2019 and 2023 using a novel deep learning approach, that transforms time series into easy-to-cluster representations. We identify two clusters of peaker units and two clusters of non-peaker units, whose different empirical flexibility is quantified by cluster-level ramp rates. Non-peaker units, around half of the sample, are empirically less flexible than peakers, and make up for more than 83% of sample must-run generation. Regulatory changes addressing the low market responsiveness of non-peakers are needed to unlock their flexibility. Y1 - 2025 U6 - https://doi.org/10.48550/arXiv.2504.16943 PB - arXiv ER - TY - RPRT A1 - Sánchez Canales, Jorge A1 - Xu, Alice Lixuan A1 - Fusar Bassini, Chiara A1 - Kaack, Lynn H. A1 - Hirth, Lion T1 - An empirical estimate of the electricity supply curve from market outcomes N2 - Researchers and electricity sector practitioners frequently require the supply curve of electricity markets and the price elasticity of supply for purposes such as price forecasting, policy analyses or market power assessment. It is common practice to construct supply curves from engineering data such as installed capacity and fuel prices. In this study, we propose a data-driven methodology to estimate the supply curve of electricity market empirically, i.e. from observed prices and quantities without further modeling assumptions. Due to the massive swings in fuel prices during the European energy crisis, a central task is detecting periods of stable supply curves. To this end, we implement two alternative clustering methods, one based on the fundamental drivers of electricity supply and the other directly on observed market outcomes. We apply our methods to the German electricity market between 2019 and 2024. We find that both approaches identify almost identical regimes shifts, supporting the idea of stable supply regimes stemming from stable drivers. Supply conditions are often stable for extended periods, but evolved rapidly during the energy crisis, triggering a rapid succession of regimes. Fuel prices were the dominant drivers of regime shifts, while conventional plant availability and the nuclear phase-out play a comparatively minor role. Our approach produces empirical supply curves suitable for causal inference and counterfactual analysis of market outcomes. Y1 - 2025 U6 - https://doi.org/10.48550/arXiv.2511.23068 PB - arXiv ER - TY - RPRT A1 - Stiewe, Clemens A1 - Xu, Alice Lixuan A1 - Eicke, Anselm A1 - Hirth, Lion T1 - Cross-border cannibalization: Spillover effects of wind and solar energy on interconnected European electricity markets N2 - 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. Y1 - 2024 U6 - https://doi.org/10.48550/arXiv.2405.17166 PB - arXiv ER - TY - JOUR A1 - Stiewe, Clemens A1 - Xu, Alice Lixuan A1 - Eicke, Anselm A1 - Hirth, Lion T1 - Cross-border cannibalization: Spillover effects of wind and solar energy on interconnected European electricity markets JF - Energy Economics N2 - The average per-MWh revenue, or market value, of wind and solar energy tends to fall with increasing market share, as is now evident across European electricity markets. At the same time, these markets are becoming more interconnected. In this paper, we empirically study 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 patterns are correlated between countries, 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, the data suggest that solar value is not. These results can be used to estimate the impact of simultaneous domestic and neighboring capacity expansion: 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 point. For solar, this number is almost 4 percentage points. Y1 - 2025 U6 - https://doi.org/10.1016/j.eneco.2025.108251 SN - 0140-9883 N1 - Open Access publication is funded by the Hertie School Library VL - 143 PB - Elsevier BV ER -