Huang Zhenyu, Yuan Zhao
arXiv 13 Feb 2026 · eess.SY
arXiv:2602.12782 · PDF · DOI · OpenAlex · Extracted main text
While ex-ante screening and static price caps are global standards for mitigating price volatility, Singapore's electricity market employs a unique dual-defense mechanism integrating vesting contracts (VC) with a temporary price cap (TPC). Using high-frequency data from 2021 to 2024, this paper evaluates this mechanism and yields three primary findings. First, a structural trade-off exists within the VC framework: while VC quantity (VCQ) suppresses average prices, it paradoxically exacerbates instability via liquidity squeezes. Conversely, VC price (VCP) functions as a tail-risk anchor, dominating at extreme quantiles where VCQ efficacy wanes. Second, a structural break around the 2023 reform reveals a fundamental re-mapping of price dynamics; the previously positive pass-through from offer ratios to clearing prices was largely neutralized post-reform. Furthermore, diagnostics near the TPC threshold show no systematic evidence of strategic bid shading, confirming the TPC's operational integrity. Third, the dual-defense mechanism exhibits a critical synergy that resolves the volatility trade-off. The TPC reverses the volatility penalty of high VCQ, shifting the elasticity of conditional volatility from a destabilizing 0.636 to a stabilizing -0.213. This synergy enables the framework to enhance tail-risk control while eliminating liquidity-related stability costs. We conclude that this dual-defense mechanism successfully decouples price suppression from liquidity risks, thereby maximizing market stability.
appendix boundary found by none_found · 100% of the source is main text. Read the extracted text to check this.
The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Energy Market Authority (2023) Enhancements to the Regulatory Regime for Electricity Retailers | 0.644 | 2 | 2 | 100% |
| 2 | Loi, Tian Sheng Allan and Jindal, Gautam (2019) Electricity market deregulation in Singapore–Initial assessment of wholesale prices | 0.644 | 2 | 2 | 100% |
| 3 | Pollitt, Michael G and von der Fehr, Nils-Henrik M and Willems, Bert… (2024) Recommendations for a future-proof electricity market design in Europe in light of the 2021-23 energy crisis | 0.644 | 2 | 2 | 100% |
| 4 | Cicala, Steve (2022) Imperfect markets versus imperfect regulation in US electricity generation | 0.511 | 2 | 1 | 100% |
| 5 | Ding, Wenfu and Wang, Lingzhi and Tian, Gaoliang (2026) Electricity spot market reform and overcapacity in fossil-fired power firms: A quasi-natural experiment based on China power mar… | 0.511 | 2 | 1 | 100% |
| 6 | Bonaldo, Cinzia and Caporin, Massimiliano and Fontini, Fulvio (2022) The relationship between day-ahead and future prices in electricity markets: An empirical analysis on taly, France, Germany, and… | 0.405 | 1 | 1 | 100% |
| 7 | Bowring, Joseph (2013) Capacity markets in PJM | 0.405 | 1 | 1 | 100% |
| 8 | Busby, Joshua W and Baker, Kyri and Bazilian, Morgan D and Gilbert,… (2021) Cascading risks: Understanding the 2021 winter blackout in Texas | 0.405 | 1 | 1 | 100% |
| 9 | Chang, Youngho (2007) The New Electricity Market of Singapore: Regulatory framework, market power and competition | 0.405 | 1 | 1 | 100% |
| 10 | Ciarreta, Aitor and Damoun, Anas and Espinosa, Maria Paz (2025) A restructured Moroccan electricity market and its interaction with the Iberian power market | 0.405 | 1 | 1 | 100% |
Showing the top 10 of 32 scored citations.