The Impact of an Interregional Transmission Line on Prices and Volumes on the Russian Electricity Market
This paper investigates the change in the behavior of prices and volumes on the Russian electricity market, caused by changes in the electrical grid. The analysis is performed on two previously unconnected macro regions, which currently have a “fictional” interregional transmission line. We use a dataset with economic variables together with the flow frequency as a technical variable of the electrical grid and prove that the latter matters. Our estimates indicate that given the existence of the interregional link, prices in the regions converge to some extent and generation volumes in the regions are shaped by its regions' and the adjacent regions' load. In the future research, the whole electrical grid of Russia should be taken into account.