*Article* **A Speculative Trading Model for the Electricity Market: Based on Japan Electric Power Exchange**

**Jun Maekawa 1,\* and Koji Shimada 2**


Received: 30 June 2019; Accepted: 28 July 2019; Published: 31 July 2019

**Abstract:** Renewable energy sources produce less environmental impact and have little marginal cost. Thus, because of these characteristics, it is desirable to disseminate it for the purpose of economic efficiency. Because of the uncertainty in the supply of renewable energy and the special feature of electricity as a good, such as merit order curve, introducing forward markets is an essential factor in a liberalized market. In European countries, which have already established several mechanisms for managing liquidity including markets with several timelines, the market liquidity invites the investor to perform some speculative action. We present a simple electric power market model to analyze the speculative actions of electricity suppliers and the price effect of such actions. Moreover, we found that the speculative action improves the inelasticity of the demand in electricity market.

**Keywords:** electricity market; speculative trading; forward market
