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The general opinion among power industry representatives and electricity market analysts is that the Nordic electricity market has worked well. The purpose of this paper is to explore why the Nordic electricity market has performed well and to consider to what extent the Nordic experiences are relevant for other countries. In particular, we investigate causes as to why the Nordic market managed to withstand the supply shock in 2002 -2003. A comparison is made with the California case, and the potential problem of market power abuse is investigated in particular. The relatively successful electricity market reform in the Nordic countries seems to be attributable to: a simple but sound market design, a successful dilution of market power, a strong political support for deregulation and voluntary, informal commitment to public service by the power industry.

The integration of the power markets in Norway and Sweden in 1996 significantly constrained the major power companies' ability to exercise market power within their national borders. In recent years, however, mergers and reciprocal acquisition of shares have reduced the number of independent players on the Norwegian-Swedish power market. i'be aim of this paper is to explore to what extent increasing cross-ownership among the major power companies in Norway and Sweden might re-establish the market power that was lost when the two national power markets were integrated. The analysis is based on a numerical model, assuming Cournot quantity setting behavior, of the Norwegian-Swedish power market, The simulation results suggest that partial ownership relations between generators tend to increase horizontal market power and thus the market price of electricity.

There is concern that prices in a market for Green Certificates (GCs) primarily based on volatile wind power will fluctuate excessively, leading to corresponding volatility of electricity prices. Applying a rational expectations simulation model of competitive storage and speculation of GCs the paper shows that the introduction of banking of GCs may reduce price volatility considerably and lead to increased social surplus. Banking lowers average prices and is therefore not necessarily to the benefit of “green producers”. Proposed price bounds on GC-prices will reduce the importance of banking and even of the GC system itself. Copyright Springer Science+Business Media, Inc. 2006commodity speculation, electricity, environment, green certificates, marketable permits, uncertainty, Q28, Q42, Q48,

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