The Benefits of the Integration of the European Electricity Market: Evidence from Day-Ahead prices in Italy-North bidding zone.

In the process of reshaping the Electricity market as a result of the liberalization impetus, increased importance is given to efficiency and security of supply. Along with the introduction of Renewable Energy Sources generation technologies, due to the necessary action to preserve the environment, the integration of the European Electricity Market is proceeding. An analysis of the technical and economic benefits brought by integration is proposed, with a focus on social welfare gains and price dynamics. The reference area is the Northern Italian zone and the effects of electricity trades with the neighboring counties, France, Switzerland, Austria, Slovenia, and the Central Northern Italian zone. The Day-Ahead wholesale electricity market is analyzed, in the period 2015-2020, finding empirical evidence of a negative effect of cross-border trades inflows on the prices. The dataset is divided into hourly time slots and examined only those of greatest interest, H4-H13-H19. Summing up the results, an increase of 1000 MWh of incoming flows leads to a price decrease of 3.27 €/MWh in H4, 2.34 €/MWh in H13, and 3.74 €/MWh in H19, depending on the specific market dynamics.