Power exchange price volatility analysis after one year of Trilateral Market Coupling

Abstract

Trilateral market coupling (TLC) was launched in November 2006 in Belgium, France and the Netherlands. The initiative results in a sharp decrease of hourly price differences. This paper analyses whether the price convergence obtained, also reduced price volatility. Evidence for a significant price volatility reduction has only been found on APX. One possible explanation is given by introducing the volatility reduction potential based on the non-simultaneous occurrence of shocks.