Spatial Pattern in Modeling Electricity Prices: Evidence from the PJM Market
Author(s): Popova, J.
Reference: 24th USAEE and IAEE North American Conference, July 8-10, Washington, DC, 2004
Abstract: This paper analyses the evolution of electricity prices in deregulated market. I formulate a model that takes into account the spatial features of a network of a market. The model is applied to equilibrium electricity spot prices of the PJM market. An empirical analysis indicates that the problem of unobserved spatial correlation in the network can be modeled by the Spatial Error Model providing an additional insight about the spot electricity prices in the PJM market. The topology of the network and the structure of the market are responsible for the spatial correlation, which should not be ignored by careful research.
Keywords: electricity spot prices, deregulated PJM market, modeling, spatial features