Markov switching of the electricity supply curve and power prices dynamics

► The functional form of the electricity supply curve is a power law. ► The exponent is a two-state Markov process. ► The power prices dynamics is a regime-switching process induced by Markov transitions. ► One endogenous non-Brownian component of the motion is responsible for jumps and spikes. ► The empirical analysis reveals a good adaptability of the model to market data.