Reaching New Lows? The Pandemic's Consequences for Electricity Markets - David Benatia


The large reductions in electricity demand caused by the COVID-19 crisis have disrupted electricity systems worldwide. This article draws insights from New York into the consequences of the pandemic for electricity markets. It disentangles the e ffects of the demand reductions, increased forecast errors, and fuel price drops on the day-ahead and real-time markets. From March 16 to May 31, New York has experienced a 6.5% demand reduction, prices have dropped, and producers have lost $87 million (-18%). This estimate extrapolates to $2.6 billion for the entire US. Looking forward, these new lows signal the needs for market design adjustments.

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