The impact of end-user market integration and the smart grid on electricity retailers in the Nordic region

Iliana Ilieva and Steven A. Gabriel

Abstract

The Nordic end-user market for electricity has recently been the subject of significant changes. The energy authorities within the Nordic countries have been working intensively to create a fully operational common electricity retail market, and all customers were due to have smart meters installed by the end of 2019. These changes are of particular concern for the suppliers of retail electric power, as competition will increase and the retail products and offers related to the smart grid and specific customers’ needs will gain importance. With the help of a mixed complementarity problem formulation that describes a simplified market setting with two competing retailers, we analyze the impact of the pending market changes on electricity retailers’ price markup and profit.