Italian wholesale electricity market: RES effects across day-ahead and balancing markets

The relationship between wholesale electricity day-ahead and balancing prices is empirically investigated in Italy during years 2012-2014 characterized by high RES generation. We assess the situations of excess demand and excess supply with respect to the differences in quantities promised on the day-ahead market and actually delivered/demanded on real time; hence, we provide empirical evidence on Italian regulation power and corresponding prices. Our results partly confirm those obtained by Skytte (1999). We observe that regulating power prices are not influenced by the amount of regulation in both scenarios; even if they actually behave differently to up- and down-regulation. In addition, we quantify the premia of readiness according to specific selected hours and across Italian zones.