Mapping price dynamics across electricity market designs: A functional data approach with STL decomposition
Year: 2026
Type: article
Abstract: This study develops a functional data analysis (FDA) framework to investigate how electricity price dynamics respond to changes in energy generation across countries with different market structures. Using Seasonal-Trend decomposition using Loess (STL) decomposition, electricity prices are separated into trend, seasonal, and irregular components to distinguish market-driven cycles from policy-driven signals. Functional principal component analysis (FPCA) is applied to extract shared and country-specific seasonal features, while multivariate functional response analysis (FRA) quantifies the time-varying influence of energy generation on price. The analysis covers six countries, Germany, the United Kingdom, the United States, France, China, and Brazil, which represent a spectrum of liberalized, semi-regulated, and regionally fragmented electricity markets. The results reveal that renewables in liberalized systems drive immediate price volatility, while policy coordination in semi-regulated systems leads to delayed and smoothed price adjustments. By linking institutional design with functional elasticity patterns, the study offers a unified approach to evaluating the interplay between price signals and energy generation in diverse regulatory contexts. • STL decomposition reveals diverse seasonal patterns in electricity generation across countries, highlighting both expected and unconventional dynamics. • FPCA reveals cross-country contrasts in magnitude and structure, reflecting differences in market design and generation mix. • FRA reveals dynamic alignment between seasonal electricity price fluctuations and output patterns of different energy sources across six countries.
Source: Applied Energy
Authors: Miao Yu, Philipp Sibbertsen
Institution: Leibniz University Hannover
Language: English
Subfield: Electrical and Electronic Engineering
Field: Engineering
Domain: Physical Sciences
Open Access status: hybrid
Estimated APC paid: $4,430
OpenAlex ID: W7123362270