Electricity Trading in Energy Market Integration: A Theoretical Review

This paper surveys theory and practice on how a larger and integrated energy market can propel electricity trading through economies of scale. We make a systematic presentation of theories and methods used by various scholars to generate knowledge on integrated electricity markets. We discuss paradigms, concepts, and practices emanating from the complex topic of a unified electricity market with an intent to identify gaps. We conclude that electricity trading in EMI has a propensity to drive both economic integration and sustainable energy access; that crafting ways and means for integrating cross-border systems without sacrificing the local economy could make the idea of EMI more palatable to partner countries; and that adoption of ex ante studies that are non-data oriented could improve the design of upcoming regional electricity markets.