Market coupling between electricity markets: Theory and empirical evidence for the Italian-Slovenian interconnection

Since January 1st, 2011 the electricity exchanges of Italy and Slovenia are working under a mechanism of market coupling for their respective day-ahead markets. Similar mechanisms are being implemented in many European countries to foster the integration of electricity markets that eventually will merge into one large European power market. This short paper is one of the first works in which, by analysing market results, we try to assess the degree of integration of the Italian and Slovenian electricity markets due to the market coupling policy.