Title The economics of electricity markets / Darryl Biggar, Mohammad Hesamzadeh. [O'Reilly electronic resource]

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Chichester, West Sussex, United Kingdom : Wiley, 2014.

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Bookmark link: https://library.naperville-lib.org:444/record=b3167165~S1

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Description	1 online resource
Series	Wiley - IEEE
	Wiley - IEEE.
Summary	"The book covers the basic modelling of electricity markets, including the impact of uncertainty, an integral part of generation investment decisions and transmission cost-benefit analysis"-- Provided by publisher.
Bibliography	Includes bibliographical references and index.
Contents	pt. I INTRODUCTION TO ECONOMIC CONCEPTS -- 1. Introduction to Micro-economics -- 1.1. Economic Objectives -- 1.2. Introduction to Constrained Optimisation -- 1.3. Demand and Consumers' Surplus -- 1.3.1. The Short-Run Decision of the Customer -- 1.3.2. The Value or Utility Function -- 1.3.3. The Demand Curve for a Price-Taking Customer Facing a Simple Price -- 1.4. Supply and Producers' Surplus -- 1.4.1. The Cost Function -- 1.4.2. The Supply Curve for a Price-Taking Firm Facing a Simple Price -- 1.5. Achieving Optimal Short-Run Outcomes Using Competitive Markets -- 1.5.1. The Short-Run Welfare Maximum -- 1.5.2. An Autonomous Market Process -- 1.6. Smart Markets -- 1.6.1. Smart Markets and Generic Constraints -- 1.6.2.A Smart Market Process -- 1.7. Longer-Run Decisions by Producers and Consumers -- 1.7.1. Investment in Productive Capacity -- 1.8. Monopoly -- 1.8.1. The Dominant Firm -- Competitive Fringe Structure -- 1.8.2. Monopoly and Price Regulation.
	1.9. Oligopoly -- 1.9.1. Cournot Oligopoly -- 1.9.2. Repeated Games -- 1.10. Summary -- Questions -- Further Reading -- pt. II INTRODUCTION TO ELECTRICITY NETWORKS AND ELECTRICITY MARKETS -- 2. Introduction to Electric Power Systems -- 2.1. DC Circuit Concepts -- 2.1.1. Energy, Watts and Power -- 2.1.2. Losses -- 2.2. AC Circuit Concepts -- 2.3. Reactive Power -- 2.3.1. Mathematics of Reactive Power -- 2.3.2. Control of Reactive Power -- 2.3.3. Ohm's Law on AC Circuits -- 2.3.4. Three-Phase Power -- 2.4. The Elements of an Electric Power System -- 2.5. Electricity Generation -- 2.5.1. The Key Characteristics of Electricity Generators -- 2.6. Electricity Transmission and Distribution Networks -- 2.6.1. Transmission Networks -- 2.6.2. Distribution Networks -- 2.6.3.Competition and Regulation -- 2.7. Physical Limits on Networks -- 2.7.1. Thermal Limits -- 2.7.2. Voltage Stability Limits -- 2.7.3. Dynamic and Transient Stability Limits -- 2.8. Electricity Consumption.
	2.9. Does it Make Sense Distinguish Electricity Producer's and Consumers? -- 2.9.1. The Service Provided by the Electric Power Industry -- 2.10. Summary -- Questions -- Further Reading -- 3. Electricity Industry Market Structure and Competition -- 3.1. Tasks Performed in an Efficient Electricity Industry -- 3.1.1. Short-Term Tasks -- 3.1.2. Risk-Management Tasks -- 3.1.3. Long-Term Tasks -- 3.2. Electricity Industry Reforms -- 3.2.1. Market-Orientated Reforms of the Late Twentieth Century -- 3.3. Approaches to Reform of the Electricity Industry -- 3.4. Other Key Roles in a Market-Orientated Electric Power System -- 3.5. An Overview of Liberalised Electricity Markets -- 3.6. An Overview of the Australian National Electricity Market -- 3.6.1. Assessment of the NEM -- 3.7. The Pros and Cons of Electricity Market Reform -- 3.8. Summary -- Questions -- Further Reading -- pt. III OPTIMAL DISPATCH: THE EFFICIENT USE OF GENERATION, CONSUMPTION AND NETWORK RESOURCES.
	4. Efficient Short-Term Operation of an Electricity Industry with no Network Constraints -- 4.1. The Cost of Generation -- 4.2. Simple Stylised Representation of a Generator -- 4.3. Optimal Dispatch of Generation with Inelastic Demand -- 4.3.1. Optimal Least Cost Dispatch of Generation Resources -- 4.3.2. Least Cost Dispatch for Generators with Constant Variable Cost -- 4.3.3. Example -- 4.4. Optimal Dispatch of Both Generation and Load Assets -- 4.5. Symmetry in the Treatment of Generation and Load -- 4.5.1. Symmetry Between Buyer-Owned Generators and Stand-Alone -- Generators -- 4.5.2. Symmetry Between Total Surplus Maximisation and Generation Cost Minimisation -- 4.6. The Benefit Function -- 4.7. Nonconvexities in Production: Minimum Operating Levels -- 4.8. Efficient Dispatch of Energy-Limited Resources -- 4.8.1. Example -- 4.9. Efficient Dispatch in the Presence of Ramp-Rate Constraints -- 4.9.1. Example -- 4.10. Startup Costs and the Unit-Commitment Decision.
	4.11. Summary -- Questions -- Further Reading -- 5. Achieving Efficient Use of Generation and Load Resources using a Market Mechanism in an Industry with no Network Constraints -- 5.1. Decentralisation, Competition and Market Mechanisms -- 5.2. Achieving Optimal Dispatch Through Competitive Bidding -- 5.3. Variation in Wholesale Market Design -- 5.3.1.Compulsory Gross Pool or Net Pool? -- 5.3.2. Single Price or Pay-as-Bid? -- 5.4. Day-Ahead Versus Real-Time Markets -- 5.4.1. Improving the Quality of Short-Term Price Forecasts -- 5.4.2. Reducing the Exercise of Market Power -- 5.5. Price Controls and Rationing -- 5.5.1. Inadequate Metering and Involuntary Load Shedding -- 5.6. Time-Varying Demand, the Load-Duration Curve and the Price-Duration Curve -- 5.7. Summary -- Questions -- Further Reading -- 6. Representing Network Constraints -- 6.1. Representing Networks Mathematically -- 6.2.Net Injections, Power Flows and the DC Load Flow Model.
	6.2.1. The DC Load Flow Model -- 6.3. The Matrix of Power Transfer Distribution Factors -- 6.3.1. Converting between Reference Nodes -- 6.4. Distribution Factors for Radial Networks -- 6.5. Constraint Equations and the Set of Feasible Injections -- 6.6. Summary -- Questions -- 7. Efficient Dispatch of Generation and Consumption Resources in the Presence of Network Congestion -- 7.1. Optimal Dispatch with Network Constraints -- 7.1.1. Achieving Optimal Dispatch Using a Smart Market -- 7.2. Optimal Dispatch in a Radial Network -- 7.3. Optimal Dispatch in a Two-Node Network -- 7.4. Optimal Dispatch in a Three-Node Meshed Network -- 7.5. Optimal Dispatch in a Four-Node Network -- 7.6. Properties of Nodal Prices with a Single Binding Constraint -- 7.7. How Many Independent Nodal Prices Exist? -- 7.8. The Merchandising Surplus, Settlement Residues and the Congestion Rents -- 7.8.1. Merchandising Surplus and Congestion Rents -- 7.8.2. Settlement Residues.
	7.8.3. Merchandising Surplus in a Three-Node Network -- 7.9.Network Losses -- 7.9.1. Losses, Settlement Residues and Merchandising Surplus -- 7.9.2. Losses and Optimal Dispatch -- 7.10. Summary -- Questions -- Further Reading -- 8. Efficient Network Operation -- 8.1. Efficient Operation of DC Interconnectors -- 8.1.1. Entrepreneurial DC Network Operation -- 8.2. Optimal Network Switching -- 8.2.1.Network Switching and Network Contingencies -- 8.2.2.A Worked Example -- 8.2.3. Entrepreneurial Network Switching? -- 8.3. Summary -- Questions -- Further Reading -- pt. IV EFFICIENT INVESTMENT IN GENERATION AND CONSUMPTION ASSETS -- 9. Efficient Investment in Generation and Consumption Assets -- 9.1. The Optimal Generation Investment Problem -- 9.2. The Optimal Level of Generation Capacity with Downward Sloping Demand -- 9.2.1. The Case of Inelastic Demand -- 9.3. The Optimal Mix of Generation Capacity with Downward Sloping Demand.
	9.4. The Optimal Mix of Generation with Inelastic Demand -- 9.5. Screening Curve Analysis -- 9.5.1. Using Screening Curves to Assess the Impact of Increased Renewable Penetration -- 9.5.2. Generation Investment in the Presence of Network Constraints -- 9.6. Buyer-Side Investment -- 9.7. Summary -- Questions -- Further Reading -- 10. Market-Based Investment in Electricity Generation -- 10.1. Decentralised Generation Investment Decisions -- 10.2. Can We Trust Competitive Markets to Deliver an Efficient Level of Investment in Generation? -- 10.2.1. Episodes of High Prices as an Essential Part of an Energy-Only Market -- 10.2.2. The M̀issing Money' Problem -- 10.2.3. Energy-Only Markets and the Investment Boom -- Bust Cycle -- 10.3. Price Caps, Reserve Margins and Capacity Payments -- 10.3.1. Reserve Requirements -- 10.3.2. Capacity Markets -- 10.4. Time-Averaging of Network Charges and Generation Investment -- 10.5. Summary -- Questions.
	pt. V HANDLING CONTINGENCIES: EFFICIENT DISPATCH IN THE VERY SHORT RUN -- 11. Efficient Operation of the Power System in the Very Short-Run -- 11.1. Introduction to Contingencies -- 11.2. Efficient Handling of Contingencies -- 11.3. Preventive and Corrective Actions -- 11.4. Satisfactory and Secure Operating States -- 11.5. Optimal Dispatch in the Very Short Run -- 11.6. Operating the Power System Ex Ante as though Certain Contingencies have Already Happened -- 11.7. Examples of Optimal Short-Run Dispatch -- 11.7.1.A Second Example, Ignoring Network Constraints -- 11.7.2.A Further Example with Network Constraints -- 11.8. Optimal Short-Run Dispatch Using a Competitive Market -- 11.8.1.A Simple Example -- 11.8.2. Optimal Short-Run Dispatch through Prices -- 11.8.3. Investment Incentives -- 11.9. Summary -- Questions -- Further Reading -- 12. Frequency-Based Dispatch of Balancing Services -- 12.1. The Intradispatch Interval Dispatch Mechanism.
	12.2. Frequency-Based Dispatch of Balancing Services -- 12.3. Implications of Ignoring Network Constraints when Handling Contingencies -- 12.3.1. The Feasible Set of Injections with a Frequency-Based IDIDM -- 12.4. Procurement of Frequency-Based Balancing Services -- 12.4.1. The Volume of Frequency Control Balancing Services Required -- 12.4.2. Procurement of Balancing Services -- 12.4.3. Allocating the Costs of Balancing Services -- 12.5. Summary -- Questions -- Further Reading -- pt. VI MANAGING RISK -- 13. Managing Intertemporal Price Risks -- 13.1. Introduction to Forward Markets and Standard Hedge Contracts -- 13.1.1. Instruments for Managing Risk: Swaps, Caps, Collars and Floors -- 13.1.2. Swaps -- 13.1.3. Caps -- 13.1.4. Floors -- 13.1.5. Collars (and Related Instruments) -- 13.2. The Construction of a Perfect Hedge: The Theory -- 13.2.1. The Design of a Perfect Hedge -- 13.3. The Construction of a Perfect Hedge: Specific Cases.
	13.3.1. Hedging by a Generator with no Cost Uncertainty -- 13.3.2. Hedging Cost-Shifting Risks -- 13.4. Hedging by Customers -- 13.4.1. Hedging by a Customer with a Constant Utility Function -- 13.4.2. Hedging Utility-Shifting Risks -- 13.5. The Role of the Trader -- 13.5.1. Risks Facing Individual Traders -- 13.6. Intertemporal Hedging and Generation Investment -- 13.7. Summary -- Questions -- 14. Managing Interlocational Price Risk -- 14.1. The Role of the Merchandising Surplus in Facilitating Interlocational Hedging -- 14.1.1. Packaging the Merchandising Surplus in a Way that Facilitates Hedging -- 14.2. Interlocational Transmission Rights: CapFTRs -- 14.3. Interlocational Transmission Rights: Fixed-Volume FTRs -- 14.3.1. Revenue Adequacy -- 14.3.2. Are Fixed-Volume FTRs a Useful Hedging Instrument? -- 14.4. Interlocational Hedging and Transmission Investment -- 14.4.1. Infinitesimal Investment in Network Capacity -- 14.4.2. Lumpy Investment in Network Capacity.
	14.5. Summary -- Questions -- Further Reading -- pt. VII MARKET POWER -- 15. Market Power in Electricity Markets -- 15.1. An Introduction to Market Power in Electricity Markets -- 15.1.1. Definition of Market Power -- 15.1.2. Market Power in Electricity Markets -- 15.2. How Do Generators Exercise Market Power? Theory -- 15.2.1. The Price -- Volume Trade-Off -- 15.2.2. The Profit-Maximising Choice of Rate of Production for a Generator with Market Power -- 15.2.3. The Profit-Maximising Offer Curve -- 15.3. How do Generators Exercise Market Power? Practice -- 15.3.1. Economic and Physical Withholding -- 15.3.2. Pricing Up and the Marginal Generator -- 15.4. The Incentive to Exercise Market Power: The Importance of the Residual Demand Curve -- 15.4.1. The Shape of the Residual Demand Curve -- 15.4.2. The Importance of Peak Versus Off-Peak for the Exercise of Market Power -- 15.4.3. Other Influences on the Shape of the Residual Demand Curve.
	15.5. The Incentive to Exercise Market Power: The Impact of the Hedge Position of a Generator -- 15.5.1. Short-Term Versus Long-Term Hedge Products and the Exercise of Market Power -- 15.5.2. Hedge Contracts and Market Power -- 15.6. The Exercise of Market Power by Loads and Vertical Integration -- 15.6.1. Vertical Integration -- 15.7. Is the Exercise of Market Power Necessary to Stimulate Generation Investment? -- 15.8. The Consequences of the Exercise of Market Power -- 15.8.1. Short-Run Efficiency Impacts of Market Power -- 15.8.2. Longer-Run Efficiency Impacts of Market Power -- 15.8.3.A Worked Example -- 15.9. Summary -- Questions -- Further Reading -- 16. Market Power and Network Congestion -- 16.1. The Exercise of Market Power by a Single Generator in a Radial Network -- 16.1.1. The Exercise of Market Power by a Single Generator in a Radial Network: The Theory -- 16.2. The Exercise of Market Power by a Single Generator in a Meshed Network.
	16.3. The Exercise of Market Power by a Portfolio of Generators -- 16.4. The Effect of Transmission Rights on Market Power -- 16.5. Summary -- Questions -- Further Reading -- 17. Detecting, Modelling and Mitigating Market Power -- 17.1. Approaches to Assessing Market Power -- 17.2. Detecting the Exercise of Market Power Through the Examination of Market Outcomes in the Past -- 17.2.1. Quantity-Withdrawal Studies -- 17.2.2. Price -- Cost Margin Studies -- 17.3. Simple Indicators of Market Power -- 17.3.1. Market-Share-Based Measures and the HHI -- 17.3.2. The PSI and RSI Indicators -- 17.3.3. Variants of the PSI and RSI Indicators -- 17.3.4. Measuring the Elasticity of Residual Demand -- 17.4. Modelling of Market Power -- 17.4.1. Modelling of Market Power in Practice -- 17.4.2. Linearisation -- 17.5. Policies to Reduce Market Power -- 17.6. Summary -- Questions -- Further Reading -- pt. VIII NETWORK REGULATION AND INVESTMENT -- 18. Efficient Investment in Network Assets.
	18.1. Efficient AC Network Investment -- 18.2. Financial Implications of Network Investment -- 18.2.1. The Two-Node Graphical Representation -- 18.2.2. Financial Indicators of the Benefit of Network Expansion -- 18.3. Efficient Investment in a Radial Network -- 18.4. Efficient Investment in a Two-Node Network -- 18.4.1. Example -- 18.5. Coordination of Generation and Network Investment in Practice -- 18.6. Summary -- Questions -- Further Reading -- pt. IX CONTEMPORARY ISSUES -- 19. Regional Pricing and Its Problems -- 19.1. An Introduction to Regional Pricing -- 19.2. Regional Pricing Without Constrained-on and Constrained-off Payments -- 19.2.1. Short-Run Effects of Regional Pricing in a Simple Network -- 19.2.2. Effects of Regional Pricing on the Balance Sheet of the System Operator -- 19.2.3. Long-Run Effects of Regional Pricing on Investment -- 19.3. Regional Pricing with Constrained-on and Constrained-off Payments.
	19.4. Nodal Pricing for Generators/Regional Pricing for Consumers -- 19.4.1. Side Deals and Net Metering -- 19.5. Summary -- Questions -- Further Reading -- 20. The Smart Grid and Efficient Pricing of Distribution Networks -- 20.1. Efficient Pricing of Distribution Networks -- 20.1.1. The Smart Grid and Distribution Pricing -- 20.2. Decentralisation of the Dispatch Task -- 20.2.1. Decentralisation in Theory -- 20.3. Retail Tariff Structures and the Incentive to Misrepresent Local Production and Consumption -- 20.3.1. Incentives for Net Metering and the Effective Price -- 20.4. Incentives for Investment in Controllable Embedded Generation -- 20.4.1. Incentives for Investment in Intermittent Solar PV Embedded Generation -- 20.4.2. Retail Tariff Structures and the Death Spiral -- 20.4.3. An Illustration of the Death Spiral -- 20.5. Retail Tariff Structures -- 20.5.1. Retail Tariff Debates -- 20.6. Declining Demand for Network Services and Increasing Returns to Scale -- 20.7. Summary -- Questions.
Language	English.
Subject	Electric power consumption.
	Electric power -- Economic aspects.
	Electric utilities.
	Électricité -- Consommation.
	Électricité -- Aspect économique.
	Services publics d'électricité.
	electric utilities.
	Electric power consumption
	Electric power -- Economic aspects
	Electric utilities
	Business & Economics.
	Industries.
Added Author	Hesamzadeh, Mohammad.
Other Form:	Print version: Biggar, Darryl R. (Darryl Ross). Economics of electricity markets. Chichester, West Sussex, United Kingdom : Wiley, 2014 9781118775752 (DLC) 2014014039 (OCoLC)875249592
ISBN	9781118775745 (electronic bk.)
	9781118775721 (ePub)
	1118775724 (ePub)
	9781118775738 (Adobe PDF)
	1118775732 (Adobe PDF)
	1118775740 (electronic bk.)
	(hardback)
	(hardback)
Standard No.	10.1002/9781118775745 doi

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