The aim of this working paper is to analyse the price convergence between the German (EEX) and the Hungarian (HUPX) power exchanges, in the case of hourly DAM prices. The presentation focuses on the 2011-2013 period, and three hypotheses are established to explain the spread: i) insufficient net transfer capacity (NTC) on the northern borders (especially with Slovakia) for equalization between the markets; ii) unfavourable hydrological conditions in the Balkan area that leads to increased demand for Hungarian imports and pushes up prices in Hungary; iii) non-planned domestic power plant outages increase the Hungarian price.

The contents of this paper are the author's sole responsibility and do not necessearily represent the views of the Regional Centre for Energy Policy Research. The analysis is still on-going, comments are welcome!