Russia Common electricity market of the EEU: Effects for Russia

Abstract

The integration of the EEU economic space includes measures directed to create common electric power markets, however, theoretical and empirical scientific research does not allow us to speak unequivocally about the positive effects for all participants of such an integration alliance. The issue of creating a common electricity market of the EEU countries is also quite controversial in practice due to a number of existing regulatory and technical barriers. The presented work is proposed to consider the possible consequences of the creation of wholesale electricity markets for Russia. The author, using the autoregressive fractional-integrated moving average model, shows that the creation of a common electricity market of the EEU countries may be premature at the current level of technical capabilities and the structure of national markets. Obtained as a result of modeling forecast price of the general market exceeds the price of the domestic wholesale market in Russia. It can cause a disparity in supply and demand on the domestic and the general markets, that increases in prices for the domestic buyers with some probability. Thus, the integration effects of the creation of a common electricity market may not always be positive for all parties to the agreement, which means that the overall gain from lower electricity prices under such an agreement requires a comparison of the costs and benefits of the agent making the decision to join such an alliance.