Essays on applied energy economics: design and regulation of the markets for electricity and natural gas

The present work introduces the main regulatory issues faced nowadays in EU by policy-makers in the design of the electricity and natural gas markets. The dissertation consists of the following parts: Chapter 2 introduces the new challenges that are currently engaging the European markets, under the perspective of the stronger integration expected in the next years. The coordination of the investments in new facilities and the rules governing their access, the increasing need of flexible resources as well as the integration of spot and forward markets will be some of the themes examined in this first section. Chapter 3 focuses on the regulatory interventions aimed at increase the flexibility of the storage services in the Italian gas market. A first part of the work is devoted to describe the storage technologies, the services they provide and their current regulatory framework. The rest of the chapter discusses the main issues related to the elicitation of flexible resources and the attraction of investments in new storage infrastructures. Finally, chapter 4 builds a model of competition to study the bidding strategies of the power generation firms in a dayahead electricity market based on zonal pricing. The analysis shows the role that investments in the transmission network may have on the degree of market competition, final prices and social welfare.