A correlation analysis of the spot market prices of the Romanian electricity sector

Abstract

Abstract The energy sector is particularly important in the national economy as a whole, while the electricity sector is its main component. The developments in this area have strong economic and social repercussions. This article makes an overview of the electricity sector, illustrating the monthly evolution of consumption and production of instantaneous electricity in Romania in the past few years. Further on, the paper presents the monthly evolution of instantaneous consumption and production of electricity in Romania, the annual structure of electricity production and the depiction of some basic indicators of centralized electricity markets managed by OPCOM. The quantitative analysis presents the monthly evolution of weighted average prices on the competitive markets managed by OPCOM and a linear correlation analysis of the spot market prices in the Eastern European region. The conclusions of the article are in line with the research in the field and show that the electricity markets have registered important evolutions in Romania, both in terms of size and prices, evolutions based on both structural and behavioral factors. It also showed that spot market prices had relatively similar developments over the period analyzed in several countries in the region, with price correlations that seem to be even stronger as the interconnection of electricity grids is higher. Therefore, the results confirm the economic theory, namely that increasing the interconnection of electricity markets can lead to energy prices being brought closer, but also to mitigating the shocks affecting these markets.