Price Forecasting of Electricity Markets in the Presence of a High Penetration of Wind Power Generators

OpenAIRE

Saber Talari; Miadreza Shafie-khah; Gerardo J. Osório; Fei Wang; Alireza Heidari; João P. S. Catalão

2017-01-01

Price forecasting plays a vital role in the day-ahead markets. Once sellers and buyers access an accurate price forecasting, managing the economic risk can be conducted appropriately through offering or bidding suitable prices. In networks with high wind power penetration, the electricity price is influenced by wind energy; therefore, price forecasting can be more complicated. This paper proposes a novel hybrid approach for price forecasting of day-ahead markets, with high penetration of wind...

Electricity market price volatility: The case of Ontario

International Nuclear Information System (INIS)

Zareipour, Hamidreza; Bhattacharya, Kankar; Canizares, Claudio A.

2007-01-01

Price volatility analysis has been reported in the literature for most competitive electricity markets around the world. However, no studies have been published yet that quantify price volatility in the Ontario electricity market, which is the focus of the present paper. In this paper, a comparative volatility analysis is conducted for the Ontario market and its neighboring electricity markets. Volatility indices are developed based on historical volatility and price velocity concepts, previously applied to other electricity market prices, and employed in the present work. The analysis is carried out in two scenarios: in the first scenario, the volatility indices are determined for the entire price time series. In the second scenario, the price time series are broken up into 24 time series for each of the 24 h and volatility indices are calculated for each specific hour separately. The volatility indices are also applied to the locational marginal prices of several pricing points in the New England, New York, and PJM electricity markets. The outcomes reveal that price volatility is significantly higher in Ontario than the three studied neighboring electricity markets. Furthermore, comparison of the results of this study with similar findings previously published for 15 other electricity markets demonstrates that the Ontario electricity market is one of the most volatile electricity markets world-wide. This high volatility is argued to be associated with the fact that Ontario is a single-settlement, real-time market

The Relationship Between Electricity Price and Wind Power Generation in Danish Electricity Markets

DEFF Research Database (Denmark)

Hu, Weihao; Chen, Zhe; Bak-Jensen, Birgitte

2010-01-01

of competitive electricity markets in some ways, is chosen as the studied power system. The relationship between the electricity price (both the spot price and the regulation price) and the wind power generation in an electricity market is investigated in this paper. The spot price, the down regulation price...... and the up regulation price generally decreases when the wind power penetration in the power system increases. The statistical characteristics of the spot price for different wind power penetration are analyzed. The findings of this paper may be useful for wind power generation companies to make the optimal...... bidding strategy and may be also useful for the optimal operation of modern power systems with high wind power penetrations....

Consumer responses to time varying prices for electricity

International Nuclear Information System (INIS)

Thorsnes, Paul; Williams, John; Lawson, Rob

2012-01-01

We report new experimental evidence of the household response to weekday differentials in peak and off-peak electricity prices. The data come from Auckland, New Zealand, where peak residential electricity consumption occurs in winter for heating. Peak/off-peak price differentials ranged over four randomly selected groups from 1.0 to 3.5. On average, there was no response except in winter. In winter, participant households reduced electricity consumption by at least 10%, took advantage of lower off-peak prices but did not respond to the peak price differentials. Response varied with house and household size, time spent away from home, and whether water was heated with electricity. - Highlights: ► Seasonal effects in winter. ► High conservation effect from information. ► Higher peak prices no effect on peak use. ► Low off-peak prices encourage less conservation off-peak.

Electricity price modeling with stochastic time change

International Nuclear Information System (INIS)

Borovkova, Svetlana; Schmeck, Maren Diane

2017-01-01

In this paper, we develop a novel approach to electricity price modeling, based on the powerful technique of stochastic time change. This technique allows us to incorporate the characteristic features of electricity prices (such as seasonal volatility, time varying mean reversion and seasonally occurring price spikes) into the model in an elegant and economically justifiable way. The stochastic time change introduces stochastic as well as deterministic (e.g., seasonal) features in the price process' volatility and in the jump component. We specify the base process as a mean reverting jump diffusion and the time change as an absolutely continuous stochastic process with seasonal component. The activity rate of the stochastic time change can be related to the factors that influence supply and demand. Here we use the temperature as a proxy for the demand and hence, as the driving factor of the stochastic time change, and show that this choice leads to realistic price paths. We derive properties of the resulting price process and develop the model calibration procedure. We calibrate the model to the historical EEX power prices and apply it to generating realistic price paths by Monte Carlo simulations. We show that the simulated price process matches the distributional characteristics of the observed electricity prices in periods of both high and low demand. - Highlights: • We develop a novel approach to electricity price modeling, based on the powerful technique of stochastic time change. • We incorporate the characteristic features of electricity prices, such as seasonal volatility and spikes into the model. • We use the temperature as a proxy for the demand and hence, as the driving factor of the stochastic time change • We derive properties of the resulting price process and develop the model calibration procedure. • We calibrate the model to the historical EEX power prices and apply it to generating realistic price paths.

Analysis of electricity price in Danish competitive electricity market

DEFF Research Database (Denmark)

Hu, Weihao; Chen, Zhe; Bak-Jensen, Birgitte

2012-01-01

electricity markets in some ways, is chosen as the studied power system. 10 year actual data from the Danish competitive electricity market are collected and analyzed. The relationship among the electricity price (both the spot price and the regulation price), the consumption and the wind power generation...... in an electricity market is investigated in this paper. The spot price and the regulation price generally decrease when the wind power penetration in the power system increases or the consumption of the power system decreases. The statistical characteristics of the spot price and the regulation price for different...... consumption periods and wind power penetration are analyzed. Simulation results show that the findings of this paper are useful for wind power generation companies to make the optimal bidding strategy so that the imbalance cost of trading wind power on the electricity market could be reduced....

International positioning of South African electricity prices and commodity differentiated pricing

Directory of Open Access Journals (Sweden)

George A. Thopila

2013-07-01

Full Text Available The South African electricity industry has seen a dramatic increase in prices over the past 3 years. This increase has been blanketed across all sectors and is based on a number of factors such as sector, usage and, in the case of domestic pricing, suburb. The cost of electricity in South Africa, particularly to the industrial sector, has been among the lowest in the world. In this paper, we analyse the recent price increases in the South African electricity sector and discuss the price determination mechanism employed by Eskom, South Africa's electricity provider. We also analyse the revenue and sales of Eskom and review the electricity price from an international perspective. The concept of differential pricing and international benchmarking is analysed as a possibility for the South African industrial electricity industry, so that all sectors are not adversely affected by across-the-board increases. Our aim is to raise the question of whether South Africa's electricity prices are in line with international increases and to suggest the possibility of differentiated prices in the local electricity sector.

Pricing and Application of Electric Storage

Science.gov (United States)

Zhao, Jialin

Electric storage provides a vehicle to store power for future use. It contributes to the grids in multiple aspects. For instance, electric storage is a more effective approach to provide electricity ancillary services than conventional methods. Additionally, electric storage, especially fast-responding units, allows owners to implement high-frequency power transactions in settings such as the 5-min real-time trading market. Such high-frequency power trades were limited in the past. However, as technology advances, the power markets have evolved. For instance, the California Independent System Operator now supports the 5-min real-time trading and the hourly day-ahead ancillary services bidding. Existing valuation models of electric storage were not designed to accommodate these recent market developments. To fill this gap, I focus on the fast-responding grid-level electric storage that provides both the real-time trading and the day-ahead ancillary services bidding. To evaluate such an asset, I propose a Monte Carlo Simulation-based valuation model. The foundation of my model is simulations of power prices. This study develops a new simulation model of electric prices. It is worth noting that, unlike existing models, my proposed simulation model captures the dependency of the real-time markets on the day-ahead markets. Upon such simulations, this study investigates the pricing and the application of electric storage at a 5-min granularity. Essentially, my model is a Dynamic Programming system with both endogenous variables (i.e., the State-of-Charge of electric storage) and exogenous variables (i.e., power prices). My first numerical example is the valuation of a fictitious 4MWh battery. Similarly, my second example evaluates the application of two units of 2MWh batteries. By comparing these two experiments, I investigate the issues related to battery configurations, such as the impacts of splitting storage capability on the valuation of electric storage.

Modelling prices in competitive electricity markets

International Nuclear Information System (INIS)

Bunn, D.W.

2004-04-01

Electricity markets are structurally different to other commodities, and the real-time dynamic balancing of the electricity network involves many external factors. Because of this, it is not a simple matter to transfer conventional models of financial time series analysis to wholesale electricity prices. The rationale for this compilation of chapters from international authors is, therefore, to provide econometric analysis of wholesale power markets around the world, to give greater understanding of their particular characteristics, and to assess the applicability of various methods of price modelling. Researchers and professionals in this sector will find the book an invaluable guide to the most important state-of-the-art modelling techniques which are converging to define the special approaches necessary for unravelling and forecasting the behaviour of electricity prices. It is a high-quality synthesis of the work of financial engineering, industrial economics and power systems analysis, as they relate to the behaviour of competitive electricity markets. (author)

The impact of electricity price changes on industrial prices and the general price level in Korea

International Nuclear Information System (INIS)

Lim, Seul-Ye; Yoo, Seung-Hoon

2013-01-01

Electricity has played an important role in the economic development of Korea and, thus, has become a critical factor in sustaining the well-being of the Korean people. This study attempts to investigate the impact of electricity price changes on industrial prices and the general price level using input–output (I–O) analysis. To this end, we apply the I–O price model to the 2011 I–O table recently produced by the Bank of Korea, paying particular attention to the electricity sector by considering it as exogenous and then investigating its impacts. The impacts of the electricity price changes on each industrial sector's prices and the general price level are quantitatively derived. For example, the overall impact of a 10% increase in electricity price on the Korean national economy is estimated to be 0.4367%. We also report the results from the model with the electricity sector endogenous and the model with endogenous electricity and labor sectors. This information can be usefully utilized in decision-making regarding price management for electricity. - Highlights: • We investigate the impact of electricity price changes on the Korean economy. • We use the input–output (I–O) analysis specifying the electricity sector as exogenous. • We apply the I–O price model to 2010 I–O table produced by the Bank of Korea. • The impact of a 10% increase in electricity price on the Korean economy is 0.2176%

An electricity price model with consideration to load and gas price effects.

Science.gov (United States)

Huang, Min-xiang; Tao, Xiao-hu; Han, Zhen-xiang

2003-01-01

Some characteristics of the electricity load and prices are studied, and the relationship between electricity prices and gas (fuel) prices is analyzed in this paper. Because electricity prices are strongly dependent on load and gas prices, the authors constructed a model for electricity prices based on the effects of these two factors; and used the Geometric Mean Reversion Brownian Motion (GMRBM) model to describe the electricity load process, and a Geometric Brownian Motion(GBM) model to describe the gas prices; deduced the price stochastic process model based on the above load model and gas price model. This paper also presents methods for parameters estimation, and proposes some methods to solve the model.

Importance of Electricity Transport Pricing in Liberalised Energy Markets

International Nuclear Information System (INIS)

Wohlgemuth, N.

2001-01-01

Electricity has traditionally been supplied by vertically integrated companies providing generation, transmission and distribution services. Consumers have purchased a bundled commodity - delivered electricity - and there has been no need to price the components individually. This is no longer the case in competitive and unbundled electricity markets. One of the outstanding issues in the restructuring of the electricity markets is the way in which transmission costs are translated into tariffs. The efforts to create a single European electricity market are difficult to reconcile due to different national network pricing approaches. The European Commission's draft regulation on conditions for access to the network for cross-border exchanges of electricity sets general principles for the pricing of international electricity exchanges. Nodal pricing provides incentives for an efficient use of generation and transmission assets. Experience shows that nodal pricing is workable, and its use may be expected to increase progressively. Postage stamp pricing does not generally provide adequate incentives for efficiency. However, inefficiencies may be small under certain conditions, and postage stamp pricing has the advantage of being relatively transparent and easy to implement. This paper presents an overview of objectives related to an effective design of transmission pricing approaches, of transmission pricing models and presents recent developments in Europe in this respect. Due to the great number of institutional designs of electricity market organisations, it will be difficult to design and implement a model of cross-border transmission pricing that results in a high degree of non-discriminatory international competition in electricity markets, a key objective of the Electricity Directive.(author)

Testing causal relationships between wholesale electricity prices and primary energy prices

International Nuclear Information System (INIS)

Nakajima, Tadahiro; Hamori, Shigeyuki

2013-01-01

We apply the lag-augmented vector autoregression technique to test the Granger-causal relationships among wholesale electricity prices, natural gas prices, and crude oil prices. In addition, by adopting a cross-correlation function approach, we test not only the causality in mean but also the causality in variance between the variables. The results of tests using both techniques show that gas prices Granger-cause electricity prices in mean. We find no Granger-causality in variance among these variables. -- Highlights: •We test the Granger-causality among wholesale electricity and primary energy prices. •We test not only the causality in mean but also the causality in variance. •The results show that gas prices Granger-cause electricity prices in mean. •We find no Granger-causality in variance among these variables

An empirical examination of restructured electricity prices

International Nuclear Information System (INIS)

Knittel, C.R.; Roberts, M.R.

2005-01-01

We present an empirical analysis of restructured electricity prices. We study the distributional and temporal properties of the price process in a non-parametric framework, after which we parametrically model the price process using several common asset price specifications from the asset-pricing literature, as well as several less conventional models motivated by the peculiarities of electricity prices. The findings reveal several characteristics unique to electricity prices including several deterministic components of the price series at different frequencies. An 'inverse leverage effect' is also found, where positive shocks to the price series result in larger increases in volatility than negative shocks. We find that forecasting performance in dramatically improved when we incorporate features of electricity prices not commonly modelled in other asset prices. Our findings have implications for how empiricists model electricity prices, as well as how theorists specify models of energy pricing. (author)

Electricity pricing

International Nuclear Information System (INIS)

Wijayatunga, P.D.C.

1994-01-01

Electricity pricing in most countries, especially in the developing world, has been determined by traditional accounting criteria where it raises revenue requirements to cover the operating costs and a return on past and future capital investments in possible power systems. The use of economic principles to improve the total economic efficiency in the electricity industry is discussed. Basic marginal cost theory, long run marginal costing (LRMC) cost categories and rating periods, marginal capacity costs, marginal energy costs, consumer costs, short run marginal costing (SRMC), marginal cost of fuel, marginal cost of network losses, market clearing price, value of unserved energy and network quality of supply cost are discussed

A robust multivariate long run analysis of European electricity prices

OpenAIRE

Bruno Bosco; Lucia Parisio; Matteo Pelagatti; Fabio Baldi

2007-01-01

This paper analyses the interdependencies existing in wholesale electricity prices in six major European countries. The results of our robust multivariate long run dynamic analysis reveal the presence of four highly integrated central European markets (France, Germany, the Netherlands and Austria). The trend shared by these four electricity markets appears to be common also to gas prices, but not to oil prices. The existence of long term dynamics among electricity prices and between electrici...

A Statistical Approach for Interval Forecasting of the Electricity Price

DEFF Research Database (Denmark)

Zhao, Jun Hua; Dong, Zhao Yang; Xu, Zhao

2008-01-01

the prediction interval is essential for estimating the uncertainty involved in the price and thus is highly useful for making generation bidding strategies and investment decisions. In this paper, a novel data mining-based approach is proposed to achieve two major objectives: 1) to accurately forecast the value......Electricity price forecasting is a difficult yet essential task for market participants in a deregulated electricity market. Rather than forecasting the value, market participants are sometimes more interested in forecasting the prediction interval of the electricity price. Forecasting...... of the electricity price series, which is widely accepted as a nonlinear time series; 2) to accurately estimate the prediction interval of the electricity price series. In the proposed approach, support vector machine (SVM) is employed to forecast the value of the price. To forecast the prediction interval, we...

Stochastic price modeling of high volatility, mean-reverting, spike-prone commodities: The Australian wholesale spot electricity market

International Nuclear Information System (INIS)

Higgs, Helen; Worthington, Andrew

2008-01-01

It is commonly known that wholesale spot electricity markets exhibit high price volatility, strong mean-reversion and frequent extreme price spikes. This paper employs a basic stochastic model, a mean-reverting model and a regime-switching model to capture these features in the Australian national electricity market (NEM), comprising the interconnected markets of New South Wales, Queensland, South Australia and Victoria. Daily spot prices from 1 January 1999 to 31 December 2004 are employed. The results show that the regime-switching model outperforms the basic stochastic and mean-reverting models. Electricity prices are also found to exhibit stronger mean-reversion after a price spike than in the normal period, and price volatility is more than fourteen times higher in spike periods than in normal periods. The probability of a spike on any given day ranges between 5.16% in NSW and 9.44% in Victoria

Labor demand effects of rising electricity prices: Evidence for Germany

International Nuclear Information System (INIS)

Cox, Michael; Peichl, Andreas; Pestel, Nico; Siegloch, Sebastian

2014-01-01

Germany continues to play a pioneering role in replacing conventional power plants with renewable energy sources. While this might be beneficial with respect to environmental quality, it also implies increasing electricity prices. The extent to which this is associated with negative impacts on employment depends on the interrelationship between labor and electricity as input factors in the production process. In this paper, we estimate cross-price elasticities between electricity and heterogeneous labor for the German manufacturing sector. We use administrative linked employer–employee micro-data combined with information on sector-level electricity prices and usage over the period 2003–2007. We find positive, but small conditional cross-price elasticities of labor demand with respect to electricity prices, which means that electricity as an input factor can be replaced by labor to a limited extent when the production level is held constant. In the case of adjustable output, we find negative unconditional cross-price elasticities, implying that higher electricity prices lead to output reductions and to lower labor demand, with low- and high-skilled workers being affected more than medium-skilled. Resulting adverse distributional effects and potential overall job losses may pose challenges for policy-makers in securing public support for the German energy turnaround. - Highlights: • We estimate cross-price elasticities for electricity and labor in manufacturing. • We use linked employer–employee micro-data from Germany for 2003 to 2007. • We find a weak substitutability between electricity and labor for constant output. • We find complementarity between electricity and labor for adjustable output. • Low- and high-skilled workers are more affected than medium-skilled

Price-elastic demand in deregulated electricity markets

OpenAIRE

Siddiqui, Afzal S.

2003-01-01

The degree to which any deregulated market functions efficiently often depends on the ability of market agents to respond quickly to fluctuating conditions. Many restructured electricity markets, however, experience high prices caused by supply shortages and little demand-side response. We examine the implications for market operations when a risk-averse retailer's end-use consumers are allowed to perceive real-time variations in the electricity spot price. Using a market-equilibrium mo...

Electricity price and Southern California's water supply options

Energy Technology Data Exchange (ETDEWEB)

Dale, Larry [Lawrence Berkeley National Laboratory, Camilla Dunham Whitehead, Andre Fargeix, Golden Gate Economics, 1 Cycltron Road, Berkeley, CA 94720 (United States)

2004-11-01

This paper evaluates the impact of fluctuating electricity prices on the cost of five options to increase the water supply to urban areas in Southern California-new surface storage, water purchases, desalination, wastewater recycling, and conservation.We show that the price of electricity required to produce and transport water influences the cost of water supply options and may alter the decision makers economic ranking of these options. When electricity prices are low, water purchase is the cost effective option. When prices exceed US$ 86/MWh, conservation of electricity and water through installation of high efficiency clothes washers is the most effective option.

Price Forecasting of Electricity Markets in the Presence of a High Penetration of Wind Power Generators

Directory of Open Access Journals (Sweden)

Saber Talari

2017-11-01

Full Text Available Price forecasting plays a vital role in the day-ahead markets. Once sellers and buyers access an accurate price forecasting, managing the economic risk can be conducted appropriately through offering or bidding suitable prices. In networks with high wind power penetration, the electricity price is influenced by wind energy; therefore, price forecasting can be more complicated. This paper proposes a novel hybrid approach for price forecasting of day-ahead markets, with high penetration of wind generators based on Wavelet transform, bivariate Auto-Regressive Integrated Moving Average (ARIMA method and Radial Basis Function Neural Network (RBFN. To this end, a weighted time series for wind dominated power systems is calculated and added to a bivariate ARIMA model along with the price time series. Moreover, RBFN is applied as a tool to correct the estimation error, and particle swarm optimization (PSO is used to optimize the structure and adapt the RBFN to the particular training set. This method is evaluated on the Spanish electricity market, which shows the efficiency of this approach. This method has less error compared with other methods especially when it considers the effects of large-scale wind generators.

Impacts of High Variable Renewable Energy Futures on Wholesale Electricity Prices, and on Electric-Sector Decision Making

OpenAIRE

Seel, J; Mills, AD; Wiser, RH

2018-01-01

Increasing penetrations of variable renewable energy (VRE) can affect wholesale electricity price patterns and make them meaningfully different from past, traditional price patterns. Many long-lasting decisions for supply- and demand-side electricity infrastructure and programs are based on historical observations or assume a business-as-usual future with low shares of VRE. Our motivating question is whether certain electric-sector decisions that are made based on assumptions reflecting low V...

NPP electrical price and tariff in the world

International Nuclear Information System (INIS)

Mochamad Nasrullah and Sriyana

2010-01-01

Construction of a Nuclear Power Plant (NPP) is always become a controversial issue. Nuclear utility and other party which support the NPP present a calculation of NPP electricity cost too optimistic. However for utility and other party that contra to nuclear present a calculation of NPP electricity cost too pessimistic. This study present to reduce the controversy of nuclear cost. In this study, capital cost (Engineering Procurement Construction, EPC) was taken from Asian, America and Europe, operating and maintenance cost uses experience data of PLN, and nuclear fuel cost uses data year of 2008 with high price, low price and average price scenario. The methodological tools used to compare electricity generation cost was LEGECOST, a program developed by IAEA (International Atomic Energy Agency), while for electricity tariff- price calculation using a program developed by PLN research and development center. With the discount rate 10%, the result shows that the cheapest electricity generation cost of NPP is less than 40 mills/kWh, and average electricity tariff was 55 mills/kWh. In the Europe countries the electricity tariff more expensive than NPP in Asia. However generating cost and electricity tariff of NPP in United Stated of America (USA) less competitive because investment cost more expensive. Generating cost and electricity tariff was different at each country depend on salary, labor wage, materials price, construction specification, regulation related to NPP and environment aspect. (author)

Excessive price reduction and extreme volatility in wind dominant electricity markets; solutions and emerging challenges

DEFF Research Database (Denmark)

Farashbashi-Astaneh, Seyed-Mostafa; Chen, Zhe; Mousavi, Omid Alizadeh

2013-01-01

High intermittency in the nature of wind power emphasize conceptual revising in the mechanisms of electricity markets with high wind power penetration levels. This paper introduces overmuch price reduction and high price volatility as two adverse consequences in future wind dominant electricity...... is developed. The paper indicates discriminatory pricing approach can be beneficial in high penetration of wind power because it alleviates high price variations and spikiness in one hand and prevents overmuch price reduction in wind dominant electricity markets on the other hand....... markets. While high price volatility imposes elevated risk levels for both electricity suppliers and consumers, excessive price reduction of electricity is a disincentive for investment in new generation capacity and might jeopardizes system adequacy in long term. A comparative study between marginal...

Regime jumps in electricity prices

NARCIS (Netherlands)

R. Huisman (Ronald); R.J. Mahieu (Ronald)

2003-01-01

textabstractMany countries are liberalizing their energy markets. Participants in these markets are exposed to market risk due to the characteristics of electricity price dynamics. Electricity prices are known to be mean-reverting very volatile and subject to frequent spikes. Models that describe

The long-run price sensitivity dynamics of industrial and residential electricity demand: The impact of deregulating electricity prices

International Nuclear Information System (INIS)

Adom, Philip Kofi

2017-01-01

This study examines the demand-side of Ghana's electricity sector. We test two important related hypotheses: (1) deregulation of electricity price does not promote energy conservation, and (2) demand-price relationship is not an inverted U-shaped. The Stock and Watson dynamic OLS is used to address the so-called second-order bias. The result showed that, deregulation of electricity price in Ghana has induced behaviours that are more consistent with energy conservation improvements. The demand-price relationship is an inverted U, which suggests that there is a price range that end-users can tolerate further price rise and still increase their consumption of electricity. However, the degree of price tolerability is higher for residential consumers than industrial consumers. The simulation results showed that, further economic growth is likely to compromise energy conservation but more in the industrial sector than the residential sector. On the other hand, future crude oil price is likely to deteriorate energy conservation in the initial years after 2016, but this trend is likely to reverse after the year 2020. Pricing mechanisms are potent to induce energy conservation but inadequate. The results suggest that they should be complemented with other stringent policies such as a mandatory energy reduction policy, investment in renewables, and personalization of energy efficiency programs. - Highlights: • Studies the demand-side of the electricity sector • Deregulating electricity price promotes energy conservation • Demand-price relationship is an inverted U-shaped • Pricing policies should be combined with other energy mandatory reduction policies

Electricity prices in the Finnish retail market

International Nuclear Information System (INIS)

Lehto, Eero

2011-01-01

This study focuses, firstly, on the pricing of electricity in the Finnish retail market. In particular, the impact of the ownership structure on prices is tested empirically. Secondly, the influence of low-cost electricity sources on retail prices is considered. The question about whether the average fuel costs rather than the wholesale price determine the retail prices is thus addressed. The supply side behaviour characterised may explain the passivity of client activity in the seemingly competitive Finnish market. - Research highlights: → Ownership has a strong impact on retail prices in the Finnish electricity market. → Locally owned companies' rates are 5-15 per cent lower than investor owned companies' rates. → Own low cost acquisition of electricity helps local firms to keep prices at low levels.

Structural and behavioural foundations of competitive electricity prices

International Nuclear Information System (INIS)

Bunn, D.W.

2004-01-01

This chapter presents a basic introduction to price formation in the new electricity markets and examines power system economics and electricity market liberalisation. Topics discussed include wholesale electricity prices, the case of gas, the effect of the instantaneous nature of the electricity product, spot markets for electricity, and the ability of industrial companies to influence prices. Market fundamentals are reviewed, and institutional reform and strategic evolution are explored. British daily average power and gas prices, monthly forward prices on the British power and gas markets, seasonal demand profile, electricity demand UK 98/00, annual cost of each plant, price formation in 1997, and monthly demand and wholesale prices in England and Wales 1990-1998 are among the graphs provided

The Combination Forecasting of Electricity Price Based on Price Spikes Processing: A Case Study in South Australia

Directory of Open Access Journals (Sweden)

Jianzhou Wang

2014-01-01

Full Text Available Electricity price forecasting holds very important position in the electricity market. Inaccurate price forecasting may cause energy waste and management chaos in the electricity market. However, electricity price forecasting has always been regarded as one of the largest challenges in the electricity market because it shows high volatility, which makes electricity price forecasting difficult. This paper proposes the use of artificial intelligence optimization combination forecasting models based on preprocessing data, called “chaos particles optimization (CPSO weight-determined combination models.” These models allow for the weight of the combined model to take values of [-1,1]. In the proposed models, the density-based spatial clustering of applications with noise (DBSCAN algorithm is used to identify outliers, and the outliers are replaced by a new data-produced linear interpolation function. The proposed CPSO weight-determined combination models are then used to forecast the projected future electricity price. In this case study, the electricity price data of South Australia are simulated. The results indicate that, while the weight of the combined model takes values of [-1,1], the proposed combination model can always provide adaptive, reliable, and comparatively accurate forecast results in comparison to traditional combination models.

CO2 Allowance and Electricity Price Interaction

Energy Technology Data Exchange (ETDEWEB)

NONE

2007-07-01

With the introduction of CO2 emission constraints on power generators in the European Union, climate policy is starting to have notable effects on energy markets. This paper sheds light on the links between CO2 prices, electricity prices, and electricity costs to industry. It is based on a series of interviews with industrial and electricity stakeholders, as well as a rich literature seeking to estimate the exact effect of CO2 prices on electricity prices.

Forecasting of electricity prices with neural networks

Energy Technology Data Exchange (ETDEWEB)

Gareta, Raquel [Centro de Investigacion de Recursos y Consumos Energeticos (CIRCE), Universidad de Zaragoza, Centro Politecnico Superior, Maria de Luna, 3, 50018 Zaragoza (Spain); Romeo, Luis M. [Centro de Investigacion de Recursos y Consumos Energeticos (CIRCE), Universidad de Zaragoza, Centro Politecnico Superior, Maria de Luna, 3, 50018 Zaragoza (Spain)]. E-mail: luismi@unizar.es; Gil, Antonia [Centro de Investigacion de Recursos y Consumos Energeticos (CIRCE), Universidad de Zaragoza, Centro Politecnico Superior, Maria de Luna, 3, 50018 Zaragoza (Spain)

2006-08-15

During recent years, the electricity energy market deregulation has led to a new free competition situation in Europe and other countries worldwide. Generators, distributors and qualified clients have some uncertainties about the future evolution of electricity markets. In consequence, feasibility studies of new generation plants, design of new systems and energy management optimization are frequently postponed. The ability of forecasting energy prices, for instance the electricity prices, would be highly appreciated in order to improve the profitability of utility investments. The development of new simulation techniques, such as Artificial Intelligence (AI), has provided a good tool to forecast time series. In this paper, it is demonstrated that the Neural Network (NN) approach can be used to forecast short term hourly electricity pool prices (for the next day and two or three days after). The NN architecture and design for prices forecasting are described in this paper. The results are tested with extensive data sets, and good agreement is found between actual data and NN results. This methodology could help to improve power plant generation capacity management and, certainly, more profitable operation in daily energy pools.

Forecasting of electricity prices with neural networks

International Nuclear Information System (INIS)

Gareta, Raquel; Romeo, Luis M.; Gil, Antonia

2006-01-01

During recent years, the electricity energy market deregulation has led to a new free competition situation in Europe and other countries worldwide. Generators, distributors and qualified clients have some uncertainties about the future evolution of electricity markets. In consequence, feasibility studies of new generation plants, design of new systems and energy management optimization are frequently postponed. The ability of forecasting energy prices, for instance the electricity prices, would be highly appreciated in order to improve the profitability of utility investments. The development of new simulation techniques, such as Artificial Intelligence (AI), has provided a good tool to forecast time series. In this paper, it is demonstrated that the Neural Network (NN) approach can be used to forecast short term hourly electricity pool prices (for the next day and two or three days after). The NN architecture and design for prices forecasting are described in this paper. The results are tested with extensive data sets, and good agreement is found between actual data and NN results. This methodology could help to improve power plant generation capacity management and, certainly, more profitable operation in daily energy pools

Hedging electricity price volatility using nuclear power

International Nuclear Information System (INIS)

Mari, Carlo

2014-01-01

Highlights: • Nuclear power is an important asset to reduce the volatility of electricity prices. • Unpredictability of fossil fuels and carbon prices makes power prices very volatile. • The dynamics of fossil fuels and carbon prices is described by Brownian motions. • LCOE values, volatilities and correlations are obtained via Monte Carlo simulations. • Optimal portfolios of generating technologies are get using a mean–variance approach. - Abstract: The analysis presented in this paper aims to put in some evidence the role of nuclear power as hedging asset against the volatility of electricity prices. The unpredictability of natural gas and coal market prices as well as the uncertainty in environmental policies may affect power generating costs, thus enhancing volatility in electricity market prices. The nuclear option, allowing to generate electricity without carbon emissions, offers the possibility to reduce the volatility of electricity prices through optimal diversification of power generating technologies. This paper provides a methodological scheme to plan well diversified “portfolios” of generating capacity that minimize the electricity price risk induced by random movements of fossil fuels market prices and by unpredictable fluctuations of carbon credits prices. The analysis is developed within a stochastic environment in which the dynamics of fuel prices as well as the dynamics of carbon credits prices is assumed to evolve in time according to well defined Brownian processes. Starting from market data and using Monte Carlo techniques to simulate generating cost values, the hedging argument is developed by selecting optimal portfolio of power generating technologies using a mean–variance approach

Short-term electricity price forecast based on the improved hybrid model

International Nuclear Information System (INIS)

Dong Yao; Wang Jianzhou; Jiang He; Wu Jie

2011-01-01

Highlights: → The proposed models can detach high volatility and daily seasonality of electricity price. → The improved hybrid forecast models can make full use of the advantages of individual models. → The proposed models create commendable improvements that are relatively satisfactorily for current research. → The proposed models do not require making complicated decisions about the explicit form. - Abstract: Half-hourly electricity price in power system are volatile, electricity price forecast is significant information which can help market managers and participants involved in electricity market to prepare their corresponding bidding strategies to maximize their benefits and utilities. However, the fluctuation of electricity price depends on the common effect of many factors and there is a very complicated random in its evolution process. Therefore, it is difficult to forecast half-hourly prices with traditional only one model for different behaviors of half-hourly prices. This paper proposes the improved forecasting model that detaches high volatility and daily seasonality for electricity price of New South Wales in Australia based on Empirical Mode Decomposition, Seasonal Adjustment and Autoregressive Integrated Moving Average. The prediction errors are analyzed and compared with the ones obtained from the traditional Seasonal Autoregressive Integrated Moving Average model. The comparisons demonstrate that the proposed model can improve the prediction accuracy noticeably.

Short-term electricity price forecast based on the improved hybrid model

Energy Technology Data Exchange (ETDEWEB)

Dong Yao, E-mail: dongyao20051987@yahoo.cn [School of Mathematics and Statistics, Lanzhou University, Lanzhou 730000 (China); Wang Jianzhou, E-mail: wjz@lzu.edu.cn [School of Mathematics and Statistics, Lanzhou University, Lanzhou 730000 (China); Jiang He; Wu Jie [School of Mathematics and Statistics, Lanzhou University, Lanzhou 730000 (China)

2011-08-15

Highlights: {yields} The proposed models can detach high volatility and daily seasonality of electricity price. {yields} The improved hybrid forecast models can make full use of the advantages of individual models. {yields} The proposed models create commendable improvements that are relatively satisfactorily for current research. {yields} The proposed models do not require making complicated decisions about the explicit form. - Abstract: Half-hourly electricity price in power system are volatile, electricity price forecast is significant information which can help market managers and participants involved in electricity market to prepare their corresponding bidding strategies to maximize their benefits and utilities. However, the fluctuation of electricity price depends on the common effect of many factors and there is a very complicated random in its evolution process. Therefore, it is difficult to forecast half-hourly prices with traditional only one model for different behaviors of half-hourly prices. This paper proposes the improved forecasting model that detaches high volatility and daily seasonality for electricity price of New South Wales in Australia based on Empirical Mode Decomposition, Seasonal Adjustment and Autoregressive Integrated Moving Average. The prediction errors are analyzed and compared with the ones obtained from the traditional Seasonal Autoregressive Integrated Moving Average model. The comparisons demonstrate that the proposed model can improve the prediction accuracy noticeably.

Economic analysis of coal price-electricity price adjustment in China based on the CGE model

International Nuclear Information System (INIS)

He, Y.X.; Zhang, S.L.; Yang, L.Y.; Wang, Y.J.; Wang, J.

2010-01-01

In recent years, coal price has risen rapidly, which has also brought a sharp increase in the expenditures of thermal power plants in China. Meantime, the power production price and power retail price have not been adjusted accordingly and a large number of thermal power plants have incurred losses. The power industry is a key industry in the national economy. As such, a thorough analysis and evaluation of the economic influence of the electricity price should be conducted before electricity price adjustment is carried out. This paper analyses the influence of coal price adjustment on the electric power industry, and the influence of electricity price adjustment on the macroeconomy in China based on computable general equilibrium models. The conclusions are as follows: (1) a coal price increase causes a rise in the cost of the electric power industry, but the influence gradually descends with increase in coal price; and (2) an electricity price increase has an adverse influence on the total output, Gross Domestic Product (GDP), and the Consumer Price Index (CPI). Electricity price increases have a contractionary effect on economic development and, consequently, electricity price policy making must consequently consider all factors to minimize their adverse influence.

Ramsey prices in the Italian electricity market

International Nuclear Information System (INIS)

Bigerna, Simona; Bollino, Carlo Andrea

2016-01-01

In this paper, we derive optimal zonal prices in the Italian day-ahead electricity market using estimation of a complete system of hourly demand in 2010–2011. In Italy, the hourly equilibrium price for all buyers is computed as a uniform average of supply zonal prices, resulting from market splitting due to line congestion. We model ex-ante individual bids expressed by heterogeneous consumers, which are distinguished by geographical zones. Using empirical estimations, we compute demand elasticity values and new zonal prices, according to a Ramsey optimal scheme. This is a new approach in the wholesale electricity market literature, as previous studies have discussed the relative merit of zonal prices, considering only the issue of line congestion. Our results show that the optimal pricing scheme can improve welfare in the day-ahead Italian electricity market, with respect to both the existing uniform price scheme and the proposal to charge the existing supply zonal prices to the demand side. - Highlights: • We model and estimate the demand of heterogeneous buyers in the electricity market. • Transmission line congestion creates welfare distortions in the market. • We derive optimal Ramsey prices in the Italian day-ahead electricity market. • We compare optimal prices with historical ones showing how to improve welfare.

Wind power feed-in impact on electricity prices in Germany 2009-2013

Directory of Open Access Journals (Sweden)

François Benhmad

2016-07-01

Full Text Available Until quite recently no electricity system had faced the challenges associated with high penetrations of renewable energy sources (RES. In this paper, we carry out an empirical analysis for Germany, as a country with high penetration of wind energy, to investigate the well-known merit-order effect. Our main empirical findings suggest that the increasing share of wind power in-feed induces a decrease of electricity spot price level but an increase of spot prices volatility. Furthermore, the relationship between wind power and spot electricity prices can be strongly impacted by European electricity grids interconnection which behaves like a safety valve lowering volatility and limiting the price decrease. Therefore, the impacts of wind generated electricity on electricity spot markets are less clearly pronounced in interconnected systems.

Constructing forward price curves in electricity markets

DEFF Research Database (Denmark)

Fleten, S.-E.; Lemming, Jørgen Kjærgaard

2003-01-01

We present and analyze a method for constructing approximated high-resolution forward price curves in electricity markets. Because a limited number of forward or futures contracts are traded in the market, only a limited picture of the theoretical continuous forward price curve is available...... to the analyst. Our method combines the information contained in observed bid and ask prices with information from the forecasts generated by bottom-up models. As an example, we use information concerning the shape of the seasonal variation from a bottom-up model to improve the forward price curve quoted...

Potential impacts of electricity price changes on price formation in the economy: a social accounting matrix price modeling analysis for Turkey

International Nuclear Information System (INIS)

Akkemik, K. Ali

2011-01-01

Recent reforms in the Turkish electricity sector since 2001 aim to introduce a tariff system that reflects costs. This is expected to affect the production and consumer prices of electricity. The changes in electricity prices are then reflected in production costs in other segments of the economy. Subsequently, producer and consumer prices will be affected. The potential impact of the changes in electricity prices that the ongoing electricity reforms in Turkey will bring about may have important implications on the price formation in economic activities and the cost of living for households. This paper evaluates the potential impacts of changes in electricity prices from a social accounting matrix (SAM) price modeling perspective. It is found that based on the estimated price multipliers that prices in the energy-producing sectors, mining, and iron and steel manufacturing sectors would be affected more severely than the remaining sectors of the economy. Consumer prices are affected slightly less than producer prices. - Research Highlights: → The impact of electricity generation costs on prices in other sectors is modeled. → A micro-SAM emphasizing electricity supply is constructed using 2002 I-O tables. → Energy, mining, and steel sectors are more responsive to electricity costs. → Living costs are less responsive to electricity cost changes than producer prices.

Probabilistic electricity price forecasting with variational heteroscedastic Gaussian process and active learning

International Nuclear Information System (INIS)

Kou, Peng; Liang, Deliang; Gao, Lin; Lou, Jianyong

2015-01-01

Highlights: • A novel active learning model for the probabilistic electricity price forecasting. • Heteroscedastic Gaussian process that captures the local volatility of the electricity price. • Variational Bayesian learning that avoids over-fitting. • Active learning algorithm that reduces the computational efforts. - Abstract: Electricity price forecasting is essential for the market participants in their decision making. Nevertheless, the accuracy of such forecasting cannot be guaranteed due to the high variability of the price data. For this reason, in many cases, rather than merely point forecasting results, market participants are more interested in the probabilistic price forecasting results, i.e., the prediction intervals of the electricity price. Focusing on this issue, this paper proposes a new model for the probabilistic electricity price forecasting. This model is based on the active learning technique and the variational heteroscedastic Gaussian process (VHGP). It provides the heteroscedastic Gaussian prediction intervals, which effectively quantify the heteroscedastic uncertainties associated with the price data. Because the high computational effort of VHGP hinders its application to the large-scale electricity price forecasting tasks, we design an active learning algorithm to select a most informative training subset from the whole available training set. By constructing the forecasting model on this smaller subset, the computational efforts can be significantly reduced. In this way, the practical applicability of the proposed model is enhanced. The forecasting performance and the computational time of the proposed model are evaluated using the real-world electricity price data, which is obtained from the ANEM, PJM, and New England ISO

Rent dissipation through electricity prices of publicly owned utilities

International Nuclear Information System (INIS)

Bernard, J-T.; Roland, M.

1997-01-01

Pricing policies of Canadian public utilities were examined. It was shown that under the existing set of rules the prices established are frequently below the marginal cost. This appears to be particularly true in the case of provinces that rely principally on hydroelectric resources. Study recommendations to bring electricity prices in line with marginal costs have had little success to date despite overwhelming evidence of large economic losses associated with the current institutional arrangements. This situation remains at the same time that governments apply high tax rates on incomes. By putting together two strands of economic literature, public choice and the theory of public utility pricing, this paper develops a simple model that explains why the median consumer prefers a low electricity price and a high tax rate. Hydro-Quebec survey data is used to confirm that these conditions are satisfied in Quebec. 17 refs., 1 tab

Comparative analysis of features of Polish and Lithuanian Day-ahead electricity market prices

International Nuclear Information System (INIS)

Bobinaite, Viktorija; Juozapaviciene, Aldona; Staniewski, Marcin; Szczepankowski, Piotr

2013-01-01

The goal of this article is to better understand the processes of electricity market price formation in Poland and Lithuania through an analysis of the features (volatility and spikes) of Lithuanian and Polish day-ahead electricity market prices and to assess how acquired electricity price features could affect the achievement of the main goals of the national energy policy. The following indicators have been calculated to determine electricity market price volatility: the oscillation coefficient, the coefficient of variation, an adjusted coefficient of variation, the standard deviation indicator, the daily velocity indicator (based on the overall average price) and the daily velocity indicator (based on the daily average price). Critical values for electricity market price have been calculated to evaluate price spikes. This analysis reveals that electricity market-price volatility is moderate in Poland and high in Lithuania. Electricity price spikes have been an observable phenomenon both in Lithuanian and in Polish day-ahead electricity markets, but they are more common in Lithuania, encompassing 3.15% of the time period analysed in Poland and 4.68% of the time period analysed in Lithuania. Volatile, spiking and increasing electricity prices in day-ahead electricity markets in Lithuania and Poland create preconditions and substantiate the relevance of implementation of the national energy policies and measures. - Highlights: • Moderate and seasonal volatility. • spiking market price and. • stable average price

Electricity: French industrialists tied up by prices

International Nuclear Information System (INIS)

Jemain, A.

2004-01-01

With more than 50% of increase in 3 years, the electricity prices reach summits in France. The industrialists, initially enthusiastic over the promises of the liberalization of European energy markets, are today particularly disappointed and denounce an irrational logic. The reasons of these inflationary prices are explained in this article: alignment of electricity prices with respect to the prices of the less efficient producers (oil and gas power plants), lack of peak production means which induces prices volatility, a commodity market model unsuitable to electricity specificities, lack of transparency in the establishment of reference prices, no margins for negotiation, and will of Electricite de France (EdF) to restore its financial status. (J.S.)

Electricity prices, large-scale renewable integration, and policy implications

International Nuclear Information System (INIS)

Kyritsis, Evangelos; Andersson, Jonas; Serletis, Apostolos

2017-01-01

This paper investigates the effects of intermittent solar and wind power generation on electricity price formation in Germany. We use daily data from 2010 to 2015, a period with profound modifications in the German electricity market, the most notable being the rapid integration of photovoltaic and wind power sources, as well as the phasing out of nuclear energy. In the context of a GARCH-in-Mean model, we show that both solar and wind power Granger cause electricity prices, that solar power generation reduces the volatility of electricity prices by scaling down the use of peak-load power plants, and that wind power generation increases the volatility of electricity prices by challenging electricity market flexibility. - Highlights: • We model the impact of solar and wind power generation on day-ahead electricity prices. • We discuss the different nature of renewables in relation to market design. • We explore the impact of renewables on the distributional properties of electricity prices. • Solar and wind reduce electricity prices but affect price volatility in the opposite way. • Solar decreases the probability of electricity price spikes, while wind increases it.

Electricity price forecasting through transfer function models

International Nuclear Information System (INIS)

Nogales, F.J.; Conejo, A.J.

2006-01-01

Forecasting electricity prices in present day competitive electricity markets is a must for both producers and consumers because both need price estimates to develop their respective market bidding strategies. This paper proposes a transfer function model to predict electricity prices based on both past electricity prices and demands, and discuss the rationale to build it. The importance of electricity demand information is assessed. Appropriate metrics to appraise prediction quality are identified and used. Realistic and extensive simulations based on data from the PJM Interconnection for year 2003 are conducted. The proposed model is compared with naive and other techniques. Journal of the Operational Research Society (2006) 57, 350-356.doi:10.1057/palgrave.jors.2601995; published online 18 May 2005. (author)

Constructing forward price curves in electricity markets

International Nuclear Information System (INIS)

Fleten, Stein-Erik; Lemming, Jacob

2003-01-01

We present and analyze a method for constructing approximated high-resolution forward price curves in electricity markets. Because a limited number of forward or futures contracts are traded in the market, only a limited picture of the theoretical continuous forward price curve is available to the analyst. Our method combines the information contained in observed bid and ask prices with information from the forecasts generated by bottom-up models. As an example, we use information concerning the shape of the seasonal variation from a bottom-up model to improve the forward price curve quoted on the Nordic power exchange

Ensemble Prediction Model with Expert Selection for Electricity Price Forecasting

Directory of Open Access Journals (Sweden)

Bijay Neupane

2017-01-01

Full Text Available Forecasting of electricity prices is important in deregulated electricity markets for all of the stakeholders: energy wholesalers, traders, retailers and consumers. Electricity price forecasting is an inherently difficult problem due to its special characteristic of dynamicity and non-stationarity. In this paper, we present a robust price forecasting mechanism that shows resilience towards the aggregate demand response effect and provides highly accurate forecasted electricity prices to the stakeholders in a dynamic environment. We employ an ensemble prediction model in which a group of different algorithms participates in forecasting 1-h ahead the price for each hour of a day. We propose two different strategies, namely, the Fixed Weight Method (FWM and the Varying Weight Method (VWM, for selecting each hour’s expert algorithm from the set of participating algorithms. In addition, we utilize a carefully engineered set of features selected from a pool of features extracted from the past electricity price data, weather data and calendar data. The proposed ensemble model offers better results than the Autoregressive Integrated Moving Average (ARIMA method, the Pattern Sequence-based Forecasting (PSF method and our previous work using Artificial Neural Networks (ANN alone on the datasets for New York, Australian and Spanish electricity markets.

Cost-reflective electricity pricing: Consumer preferences and perceptions

International Nuclear Information System (INIS)

Hall, Nina L.; Jeanneret, Talia D.; Rai, Alan

2016-01-01

In Australia, residential electricity peak demand has risen steeply in recent decades, leading to higher prices as new infrastructure was needed to satisfy demand. One way of limiting further infrastructure-induced retail price rises is via ‘cost-reflective’ electricity network pricing that incentivises users to shift their demand to non-peak periods. Empowering consumers with knowledge of their energy usage is critical to maximise the potential benefits of cost-reflective pricing. This research consulted residential electricity consumers in three Australian states on their perceptions and acceptance of two cost-reflective pricing scenarios (Time-of-Use and Peak Capacity pricing) and associated technologies to support such pricing (smart meters, in-home displays and direct load control devices). An energy economist presented information to focus groups on the merits and limitations of each scenario, and participants’ views were captured. Almost half of the 53 participants were agreeable to Time-of-Use pricing, but did not have a clear preference for Peak Capacity pricing, where the price was based on the daily maximum demand. Participants recommended further information to both understand and justify the potential benefits, and for technologies to be introduced to enhance the pricing options. The results have implications for utilities and providers who seek to reduce peak demand. - Highlights: •Electricity price rises can be limited by ‘cost-reflective’ pricing. •We consulted residential electricity consumers on Time-of-Use and Peak Capacity pricing. •Understanding of peak electricity demand must increase to enable demand shift. •Interactive website could enable consumers to evaluate pricing options. •Smart meter adoption may increase if voluntary and includes an in-home display.

ANALYSIS OF GROSS REGIONAL PRODUCT FLUCTUATIONS AND ELECTRIC POWER CONSUMPTION IN 2005- 2014. RESERVES FOR DECREASING ELECTRIC POWER PRICES

Directory of Open Access Journals (Sweden)

Suslov N. I.

2016-09-01

Full Text Available In this work we considered the trajectories of change in indicators characterizing the status of economics and power industry: gross regional product, electric power consumption, industrial production, energy prices and costs of delivering electric power to consumers in Russian regions for the last 10 years. Low global commodity prices and sanctions led to a sharp decrease of equipment import, which resulted in an acute problem of import substitution. The level of tariffs of natural monopolies is of great importance for industrial development. The goal of this work was to analyze possibilities for reducing electric power prices by changing the institutional and economic conditions of management. We analyzed not only the official information from Rosstat, but also government regulations, figures given in the official government publication «The Rossiyskaya Gazeta» as well as articles and interviews on economic problems of the electric power industry over the recent years published in «The Kommersant» newspaper. High tariffs of network marketing companies for electric energy transmission, state regulation of heating prices, financing the construction of new capacities by charging the payment in power provision contracts, high price of electric power of nuclear power plants lead to an annual increase in electric power prices for end users. In this work we considered possible solutions to limit the growth of electric power prices.

Electricity prices and power derivatives: An affine jump diffusion approach with seasonal volatility and prices

International Nuclear Information System (INIS)

Nomikos, Nikos; Soldatos, Orestes; Tamvakis, Michael

2005-01-01

Deregulation and reforms in the electricity markets over the recent years have led to increasing volatility of electricity prices since prices in the market are now determined by the fundamental rules of supply and demand. The existence of price risk in the market leads to the increasing necessity of hedging using derivatives and the subsequent development of models to price and hedge electricity derivatives. However the non-storable nature of the market implies that ''traditional'' approaches for the pricing and hedging of commodity derivatives based on the theory of storage are not applicable to electricity markets. In this paper we propose a two-factor jump diffusion model with seasonal components in order to capture the systematic pattern in the forward curve and the volatility term structure. Our model is then calibrated for the spot and the financial contracts in the Nord Pool Exchange using Kalman filter techniques. The proposed model has several advantages. First it enables to select the risk neutral measure that best fits the term structure hence capturing the most significant distributional characteristics of both spot and forwards. Second, it explains the seasonal risk premium, and finally it provides a fit for the Volatility Term Structure. The resulting model is very promising, providing a very useful Financial Engineering tool to market participants for Risk Hedging and Derivatives Pricing in the highly volatile Power Markets. (Author)

CO2 price dynamics. The implications of EU emissions trading for the price of electricity

International Nuclear Information System (INIS)

Sijm, J.P.M.; Bakker, S.J.A.; Harmsen, H.W.; Lise, W.; Chen, Y.

2005-09-01

The present study analyses the relationship between EU emissions trading and power prices, notably the implications of free allocation of emissions allowances for the price of electricity in countries of North-western Europe. To study this impact, it uses a variety of analytical approaches, including interviews with stakeholders, empirical and statistical analyses, theoretical explorations, and analyses by means of the COMPETES model. The study shows that a significant part of the costs of freely allocated allowances is passed through to power price and discusses its implications in terms of higher electricity prices for consumers and windfall profits for producers. It concludes that free allocation of emission allowances is a highly questionable policy option for a variety of reasons and suggests that auctioning might offer a better perspective

Differential electricity pricing and energy efficiency in South Africa

International Nuclear Information System (INIS)

Kohler, Marcel

2014-01-01

By international standards the economy of South Africa is extremely energy intensive with only a few countries having higher intensities. SA's primary energy use per unit of GDP is amongst the highest in the world. The high energy and electricity intensity of the economy partly reflects SA's resource endowments (in particular the abundance of coal) but is also a function of the historical under-pricing of coal and electricity by the authorities. South African mining and industrial electricity efficiency is particularly concerning and considerably lower than the global average. This paper sets out to fill a significant gap in the South African energy literature by highlighting the importance of incorporating electricity demand factors as part of the country's energy policy and electricity planning horizon. The paper focuses its attention on modelling the electricity consumption of SA's industrial and mining sectors given these account for the lion's share of electricity demand. A differential electricity pricing policy which targets electricity intensive industrial and mining activities (as practised in China since 2004) is viewed by the author to be a superior policy to blanket electricity price increases administered by authorities in an effort to encourage electricity savings and improve energy efficiency in South Africa. - Highlights: • SA's primary energy use per unit of GDP is amongst the highest in the world. • SA industrial electricity efficiency is considerably lower than the global average. • A differential electricity pricing policy which targets electricity intensive activities. • Differential tariffs raise the cost of energy inefficiency and induces energy saving. • Highlights importance of energy demand modelling in electricity supply planning

Long-term projections for electricity and gas prices

International Nuclear Information System (INIS)

Borggrefe, Frieder; Lochner, Stefan

2009-01-01

The article analyses potential developments of wholesale electricity prices in Germany until 2030. The relevant determinants and their effects on prices are shown. Several projections demonstrate the impact of future fuel prices taking the political framework into account. The importance of carbon and gas prices - and the latter's relationship to oil prices - are discussed extensively. Although forecasting electricity prices is associated with great uncertainties, the article illustrates the relative impacts of the various price determinants and their interactions. (orig.)

The price elasticity of electricity demand in South Australia

International Nuclear Information System (INIS)

Fan Shu; Hyndman, Rob J.

2011-01-01

In this paper, the price elasticity of electricity demand, representing the sensitivity of customer demand to the price of electricity, has been estimated for South Australia. We first undertake a review of the scholarly literature regarding electricity price elasticity for different regions and systems. Then we perform an empirical evaluation of the historic South Australian price elasticity, focussing on the relationship between price and demand quantiles at each half-hour of the day. This work attempts to determine whether there is any variation in price sensitivity with the time of day or quantile, and to estimate the form of any relationships that might exist in South Australia. - Highlights: → We review the scholarly literature on electricity own-price elasticity for different regions and systems. → We use annual log-linear econometric models of the electricity demand to estimate the historic South Australian price elasticity. → We focus on the relationship between price and demand quantiles at each half-hour of the day. → The overall price elasticity in South Australia ranges from -0.363 to -0.428.

Electricity prices in a competitive environment: Marginal cost pricing of generation services and financial status of electric utilities. A preliminary analysis through 2015

International Nuclear Information System (INIS)

1997-08-01

The emergence of competitive markets for electricity generation services is changing the way that electricity is and will be priced in the United States. This report presents the results of an analysis that focuses on two questions: (1) How are prices for competitive generation services likely to differ from regulated prices if competitive prices are based on marginal costs rather than regulated open-quotes cost-of-serviceclose quotes pricing? (2) What impacts will the competitive pricing of generation services (based on marginal costs) have on electricity consumption patterns, production costs, and the financial integrity patterns, production costs, and the financial integrity of electricity suppliers? This study is not intended to be a cost-benefit analysis of wholesale or retail competition, nor does this report include an analysis of the macroeconomic impacts of competitive electricity prices

Inquiry report about electricity prices

International Nuclear Information System (INIS)

2004-10-01

In March 2004, the French minister of economy, finances and industry put in the hands of the general inspection of finances and of the general council of mines, the mission to carry out an expertise about the evolution of electricity prices since February 2000, date of the progressive opening of the electricity market to competition. Since 2003, many customers, in particular the big power consuming industries, have started to worry in front of the increase of electricity prices. The conclusions of the expertise represent a contribution to the analysis of the operation of electricity markets and will participate to the improvement of this operation. This document comprises the synthesis of the report given to the minister and the full report. (J.S.)

Electricity wholesale market prices in Europe: Convergence?

International Nuclear Information System (INIS)

Zachmann, Georg

2008-01-01

This paper tests the hypothesis that the ongoing restructuring process in the European electricity sector has led to a common European market for electricity. Based on a Principal Component Analysis (PCA) of wholesale electricity prices in 2002-2006, we reject the assumption of full market integration. For several pairs of countries, the weaker hypothesis of (bilateral) convergence is accepted based on unit root tests (KPSS and ADF) and a convergence test based on filtered pairwise price relations. This indicates that the efforts to develop a single European market for electricity were so far only partially successful. We show that the daily auction prices of scarce cross-border transmission capacities are insufficient to explain the persistence of international price differentials. Empirically, our findings confirm the insufficiency of explicit capacity auctions as stated in the theoretical literature. (author)

Electricity prices in a competitive environment: Marginal cost pricing of generation services and financial status of electric utilities. A preliminary analysis through 2015

Energy Technology Data Exchange (ETDEWEB)

NONE

1997-08-01

The emergence of competitive markets for electricity generation services is changing the way that electricity is and will be priced in the United States. This report presents the results of an analysis that focuses on two questions: (1) How are prices for competitive generation services likely to differ from regulated prices if competitive prices are based on marginal costs rather than regulated {open_quotes}cost-of-service{close_quotes} pricing? (2) What impacts will the competitive pricing of generation services (based on marginal costs) have on electricity consumption patterns, production costs, and the financial integrity patterns, production costs, and the financial integrity of electricity suppliers? This study is not intended to be a cost-benefit analysis of wholesale or retail competition, nor does this report include an analysis of the macroeconomic impacts of competitive electricity prices.

Pricing of electricity in Indonesia

International Nuclear Information System (INIS)

Amarullah, M.

1983-01-01

The objectives of this study are 1) to establish a sound theoretical basis for the determinants of electricity demand in Indonesia, 2) to measure the welfare losses of existing electricity pricing, and 3) to suggest a method of reducing these welfare losses. An econometric model for electricity demand is estimated using pooled time-series of fifteen regions in Indonesia covering the period 1970-1979. The short run price elasticities for both residential and industrial/business sectors are found to be inelastic, while the long run price elasticities for these sectors are found to be quite elastic with a value of -.61 for the residential sector and of -1.1 for the industrial/business sector. Income elasticity is .8 in the short run and around 1.00 for the long run. The exposure variable that captures the accessibility of electricity, has long run elasticity of 1.00 for the residential sector and less than 1.00 for the industrial/business sector. Due to distributional considerations, the 1980's electricity rate was set below its efficient level, and has created a welfare loss of Rp.8273.23 million per month. This accounts for 36.03% of the monthly electricity revenue. A rebate mechanism is recommended in this study, which provides a way to mitigate conflicting aspects of efficiency and equity

Regulation of electricity prices?

International Nuclear Information System (INIS)

Mihok, P.

2006-01-01

In this paper author deals with the regulation of electricity prices in the Slovak Republic. Author contests the social policy of the government through doped prices of electricity. Two thirds of electricity is generated in nuclear power plants in Slovakia. Hence, it is necessary to focus on the solution of problem of nuclear waste. In 2004 Ministry of Economy stated, that the deficit in nuclear fund, from which the country have to fully cover the costs of liquidation and final disposal of nuclear waste, is estimated in the amount of around 89 billion Slovak crowns (≅ 3.7 billion $). From it, so called historical deficit, which originated because of late foundation of fund, represents officially 15 billion Slovak crowns (≅ 0.62 billion $). In Slovakia exists the real risk, that by maintenance of present state by creation and draw of the fund, it will be possible to ensure only 39 per cent of financial sources necessary for full financial handling of the back part of nuclear energetic. Even though the Ministry of Economy in connection with privatisation of Slovenske elektrarne designed to decrease the transfers of operators of nuclear power plants into nuclear fund. In 2006 the Parliament decreased by the law the level of gains of the fund from sale of nuclear electricity (the second from two components of the gains of the fund) from 6.8 to 5.95 per cent from annual revenues. So the tax of forced reduction of the price of nuclear electricity will be represented by loading of the further generations

Impact of the carbon price on the integrating European electricity market

International Nuclear Information System (INIS)

Aatola, Piia; Ollikainen, Markku; Toppinen, Anne

2013-01-01

We study the impact of the carbon price on the integrating electricity market in the EU. Our theoretical framework suggests that the price of carbon has a positive but uneven impact on electricity prices depending on the marginal production plant. The carbon price may increase price differences in the short run. We apply time series analysis on daily forward data from 2003 to 2011 and investigate whether we can find empirical evidence for our analytical findings. Our results support the hypotheses that integration in electricity prices has increased over time and that the carbon price has a positive but uneven impact on the integration of prices. - Highlights: • We model the integrating European electricity market under emissions trading scheme. • We examine the impact of carbon price on the electricity market prices. • We test theoretical hypotheses with econometric models. • Results show carbon price has a positive but uneven impact on electricity prices. • Integration among electricity prices has increased during 2003–2011

Electricity Price Forecasting Based on AOSVR and Outlier Detection

Institute of Scientific and Technical Information of China (English)

Zhou Dianmin; Gao Lin; Gao Feng

2005-01-01

Electricity price is of the first consideration for all the participants in electric power market and its characteristics are related to both market mechanism and variation in the behaviors of market participants. It is necessary to build a real-time price forecasting model with adaptive capability; and because there are outliers in the price data, they should be detected and filtrated in training the forecasting model by regression method. In view of these points, this paper presents an electricity price forecasting method based on accurate on-line support vector regression (AOSVR) and outlier detection. Numerical testing results show that the method is effective in forecasting the electricity prices in electric power market.

Real-time electricity pricing mechanism in China based on system dynamics

International Nuclear Information System (INIS)

He, Yongxiu; Zhang, Jixiang

2015-01-01

Highlights: • The system dynamics is used to research the real-time electricity pricing mechanism. • Four kinds of the real-time electricity pricing models are carried out and simulated. • It analysed the electricity price, the user satisfaction and the social benefits under the different models. • Market pricing is the trend of the real-time electricity pricing mechanism. • Initial development path of the real-time price mechanism for China is designed between 2015 and 2030. - Abstract: As an important means of demand-side response, the reasonable formulation of the electricity price mechanism will have an important impact on the balance between the supply and demand of electric power. With the introduction of Chinese intelligence apparatus and the rapid development of smart grids, real-time electricity pricing, as the frontier electricity pricing mechanism in the smart grid, will have great significance on the promotion of energy conservation and the improvement of the total social surplus. From the perspective of system dynamics, this paper studies different real-time electricity pricing mechanisms based on load structure, cost structure and bidding and analyses the situation of user satisfaction and the total social surplus under different pricing mechanisms. Finally, through the comparative analysis of examples under different real-time pricing scenarios, this paper aims to explore and design the future dynamic real-time electricity pricing mechanism in China, predicts the dynamic real-time pricing level and provides a reference for real-time electricity price promotion in the future

The effect of costs and regulation on electricity prices

International Nuclear Information System (INIS)

Schlaf, E.P.

1991-01-01

Two distinct econometric tests were performed to determine if state price regulation of public utilities has had a measurable impact on retail electricity prices. The results of both tests agree that, during the 1971-1985 period, average national electricity prices in each of the three major consuming sectors and the four Census regions were below the level which would have been preferred by profit-maximizing monopolists. Electricity consumers received price benefits during the sample period as a result of regulation. The first test of the effectiveness of state price regulation used a 'revealed preference' approach by comparing the actual prices set by regulatory commissioners with prices and outcomes predicted by three competing theories of regulatory motivation. The second test of the effectiveness of price regulation combined traditional cost function inputs with regulatory variables in reduced-form price equations to determine whether the amount of regulatory intensity, as measured by the number of staff members per regulated utility, is associated with declining electricity prices and whether appointed commissioners allow higher prices than elected commissioners

Electricity pricing model in thermal generating stations under deregulation

International Nuclear Information System (INIS)

Reji, P.; Ashok, S.; Moideenkutty, K.M.

2007-01-01

In regulated public utilities with competitive power markets, deregulation has replaced the monopoly. Under the deregulated power market, the electricity price primarily depends on market mechanism and power demand. In this market, generators generally follow marginal pricing. Each generator fixes the electricity price based on their pricing strategy and it leads to more price volatility. This paper proposed a model to determine the electricity price considering all operational constraints of the plant and economic variables that influenced the price, for a thermal generating station under deregulation. The purpose of the model was to assist existing stations, investors in the power sector, regulatory authorities, transmission utilities, and new power generators in decision-making. The model could accommodate price volatility in the market and was based on performance incentive/penalty considering plant load factor, availability of the plant and peak/ off peak demand. The model was applied as a case study to a typical thermal utility in India to determine the electricity price. It was concluded that the case study of a thermal generating station in a deregulated environment showed that the electricity price mainly depended on the gross calorific value (GCV) of fuel, mode of operation, price of the fuel, and operating charges. 11 refs., 2 tabs., 1 fig

The compass rose pattern in electricity prices.

Science.gov (United States)

Batten, Jonathan A; Hamada, Mahmoud

2009-12-01

The "compass rose pattern" is known to appear in the phase portraits, or scatter diagrams, of the high-frequency returns of financial series. We first show that this pattern is also present in the returns of spot electricity prices. Early researchers investigating these phenomena hoped that these patterns signaled the presence of rich dynamics, possibly chaotic or fractal in nature. Although there is a definite autoregressive and conditional heteroscedasticity structure in electricity returns, we find that after simple filtering no pattern remains. While the series is non-normal in terms of their distribution and statistical tests fail to identify significant chaos, there is evidence of fractal structures in periodic price returns when measured over the trading day. The phase diagram of the filtered returns provides a useful visual check on independence, a property necessary for pricing and trading derivatives and portfolio construction, as well as providing useful insights into the market dynamics.

A uniform price auction with locational price adjustments for competitive electricity markets

International Nuclear Information System (INIS)

Ethier, R.; Mount, T.; Schulze, W.; Zimmerman, R.; Thomas, R.

1999-01-01

Competitive electricity markets which rely on centralized dispatch require a mechanism to solicit offers from competing generators. Ideally, such an auction mechanism, provides incentives to submit offers equal to the marginal cost of generation for each generator. Economic theory suggests that the Uniform Price auction is an appropriate institution. However, an efficient implementation of this auction in an electricity context requires that the offers used in the auction reflect the appropriate locational price adjustments for transmission losses and congestion. This paper describes a uniform price auction that incorporates locational price adjustments on a Web-based platform suitable for experimentation. Preliminary results show dramatically different price and revenue results when compared with a simple continuous Discriminative auction. (author)

Forecasting prices and price volatility in the Nordic electricity market

International Nuclear Information System (INIS)

2001-01-01

We develop a stochastic model for long term price forecasting in a competitive electricity market environment. It is demonstrated both theoretically and through model simulations that non-stochastic models may give biased forecasts both with respect to price level and volatility. In the paper, the model concept is applied on the restructured Nordic electricity market. It is specially in peak load hours that a stochastic model formulation provides significantly different results than an expected value model. (author)

Economic analysis of electric heating based on critical electricity price

Science.gov (United States)

Xie, Feng; Sun, Zhijie; Zhou, Xinnan; Fu, Chengran; Yang, Jie

2018-06-01

The State Grid Corporation of China proposes an alternative energy strategy, which will make electric heating an important task in the field of residential electricity consumption. This article takes this as the background, has made the detailed introduction to the inhabitant electric heating technology, and take the Zhangjiakou electric panels heating technology as an example, from the expense angle, has carried on the analysis to the electric panels heating economy. In the field of residential heating, electric panels operating costs less than gas boilers. After customers implying energy-saving behavior, electric panels operating cost is even lower than coal-fired boilers. The critical price is higher than the execution price, which indicates that the economic performance of the electric panels is significantly higher than that of the coal boiler.

Loss Aversion and Time-Differentiated Electricity Pricing

Energy Technology Data Exchange (ETDEWEB)

Spurlock, C. Anna [Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)

2015-06-01

I develop a model of loss aversion over electricity expenditure, from which I derive testable predictions for household electricity consumption while on combination time-of-use (TOU) and critical peak pricing (CPP) plans. Testing these predictions results in evidence consistent with loss aversion: (1) spillover effects - positive expenditure shocks resulted in significantly more peak consumption reduction for several weeks thereafter; and (2) clustering - disproportionate probability of consuming such that expenditure would be equal between the TOUCPP or standard flat-rate pricing structures. This behavior is inconsistent with a purely neoclassical utility model, and has important implications for application of time-differentiated electricity pricing.

The electricity prices in the European Union. The role of renewable energies and regulatory electric market reforms

International Nuclear Information System (INIS)

Moreno, Blanca; López, Ana J.; García-Álvarez, María Teresa

2012-01-01

The European Union electricity market has been gradually liberalized since 1990s. Theoretically, competitive markets should lead to efficiency gains in the economy thus reducing electricity prices. However, there is a controversial debate about the real effects of the electricity liberalization on electricity prices. Moreover, the increased generation of electricity from renewable energies RES-E (Electricity from Renewable Energy Sources) is also integrated in wholesale market reducing wholesale prices, but the final effect over household prices is not clear. In order to contribute to this debate, this paper provides an empirical investigation into the electricity prices determinants. In fact we develop econometric panel models to explore the relationship between the household electricity prices and variables related to the renewable energy sources and the competition in generation electricity market. More specifically we use a panel data set provided by Eurostat and covering 27 European Union countries during the period 1998–2009. Our results suggest that electricity prices increase with the deployment of RES-E and with the expansion of greenhouse gas emissions produced by energy industries- as a European Union CO 2 emission trading scheme exists. Results also reveal that country's characteristics can affect household electricity prices. -- Highlights: ► Electricity liberalized markets should lead to reduce electricity prices. ► The use of renewable energies (RES) reduce wholesale electricity prices. ► However, household electricity prices are increasing in European Union. ► Panel data models are developed to investigate the effect of RES and electricity competition on household electricity prices. ► We find that the deployment of RES increases prices paid by consumers in a liberalized market.

Consequences of long-term power outages and high electricity prices lasting for months

International Nuclear Information System (INIS)

2005-01-01

Several areas in the world have experienced electricity outages for longer periods of time, but the consequences of these are sparsely documented. There is a need for further analysis of the socioeconomic consequences of the outages. In addition to KILE (Quality adjusted revenue framework for un supplied energy) costs one has to take into account that the costs often increase proportionally with the durance of the outage, and that KILE tariffs do not reflect lost consumer's surplus for products that are not produced during an outage. A good example is the public underground transport, where the company's economical loss can be significantly smaller than the loss of utility value for the travellers. If the authorities act with reasonability it is difficult to see that periods with very high prices represent a big problem. The most important problems are related to diffused effects, especially for households with a weak economy. These problems can be solved with improved contractual forms (price guarantees) or by transfers to the households, without weakening the incentives for electricity economising (ml)

Market prices for solar electricity in Ontario

International Nuclear Information System (INIS)

Rowlands, I.H.

2006-01-01

The Ontario electricity supply is facing considerable challenges while demand is increasing due to a growing population and increased economic growth needs. In response to these challenges, the government of Ontario established the Ontario Power Authority (OPA) in 2004 to ensure adequate, reliable and secure electricity supply and resources in Ontario. The OPA has also engaged in activities to facilitate the diversification of sources of electricity supply by promoting the use of cleaner energy sources and technologies, including alternative energy sources and renewable energy. The purpose of this paper was to advance discussions regarding the contribution that solar PV can make to Ontario's supply mix. In particular, it determined the value of the electricity that would have been produced by a PV system located in Waterloo, Ontario under the following 4 pricing regimes: (1) the conventional small user tariff system currently in place in Ontario, (2) the time-of-use pricing system that is voluntarily available to those who have smart meters installed in their facilities, (3) the spot market, hourly prices, to which some of Ontario's largest electricity users are exposed, and (4) the recently-proposed rate for standard offer contracts for PV systems. The study showed that a solar PV system that produces 3,000 kWh of electricity over the course of a year would generate different revenue amounts, ranging from the smallest amount of approximately $174.00 to $1,260.00, depending on the pricing regime. The pricing regime that reflects real, time-of-day electricity prices appears to be most advantageous to solar PV systems. It was recommended that additional work is needed regarding the other benefits of solar PV, such as avoided capacity/generation needs, avoided transmission and distribution cost and losses, environmental benefits, and job creation. 3 refs., 4 tabs., 8 figs

Effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries

International Nuclear Information System (INIS)

Nagayama, Hiroaki

2007-01-01

Electric power sector reforms in the electricity supply industry have had an impact on industrial and household prices in developing countries in Latin America, the former Soviet Union, and Eastern Europe. Using original panel data for 83 countries during the period from 1985 to 2002, we examine how each policy instrument of the reform measures influenced electricity prices for countries in the above regions. We found that variables such as entry of independent power producers (IPP), unbundling of generation and transmission, establishment of a regulatory agency, and the introduction of a wholesale spot market have had a variety of impacts on electricity prices, some of which were not always consistent with expected results. The research findings suggest that neither unbundling nor introduction of a wholesale pool market on their own necessarily reduces the electric power price. In fact, contrary to expectations, there was a tendency for the price to rise. However, coexistent with an independent regulator, unbundling may work to reduce electricity prices. Privatization and the introduction of foreign IPP and retail competition lower electricity prices in some regions, but not all

Reserve price: Lessons learned from Brazilian electricity procurement auctions

International Nuclear Information System (INIS)

Rego, Erik Eduardo

2013-01-01

Auctions have been used in several formats in the electric energy industry. In general, regulators may be uncomfortable initiating a reverse auction at a higher-than-expected final price, fearing that participants may sell their energy at an excess profitability. Nevertheless, evidence from electricity procurement auctions conducted in Brazil supports the findings that these types of auctions have the opposite effect. By attracting a larger number of agents, these auctions can trigger stronger competition and lead to lower settlement pricing. Accordingly, the Brazilian cases examined in this article present significant evidence to support this directional theory. In fact, there are some cases of electricity procurement auctions that show that inadequate auction reserve pricing leads to inefficient outcomes and may also cause the auction to fail. On the other hand, auctions with adequate price caps have led to lower final clearing prices, thus contributing to reasonable final energy pricing. - Highlights: • Outcomes from Brazilian electricity procurement auctions were analyzed. • Cases of success and frustration after adopting (in)adequate reserve prices. • Setting different price caps per source is inefficient. • Higher-than-normal price cap is more effective than fine-tuning reserve prices

Transmission of prices and price volatility in Australian electricity spot markets: a multivariate GARCH analysis

International Nuclear Information System (INIS)

Worthington, A.; Kay-Spratley, A.; Higgs, H.

2005-01-01

This paper examines the transmission of spot electricity prices and price volatility among the five regional electricity markets in the Australian National Electricity Market: namely, New South Wales, Queensland, South Australia, the Snowy Mountains Hydroelectric Scheme and Victoria. A multivariate generalised autoregressive conditional heteroskedasticity model is used to identify the source and magnitude of price and price volatility spillovers. The results indicate the presence of positive own mean spillovers in only a small number of markets and no mean spillovers between any of the markets. This appears to be directly related to the physical transfer limitations of the present system of regional interconnection. Nevertheless, the large number of significant own-volatility and cross-volatility spillovers in all five markets indicates the presence of strong autoregressive conditional heteroskedasticity and generalised autoregressive conditional heteroskedasticity effects. This indicates that shocks in some markets will affect price volatility in others. Finally, and contrary to evidence from studies in North American electricity markets, the results also indicate that Australian electricity spot prices are stationary. (author)

Modelling electricity futures prices using seasonal path-dependent volatility

International Nuclear Information System (INIS)

Fanelli, Viviana; Maddalena, Lucia; Musti, Silvana

2016-01-01

Highlights: • A no-arbitrage term structure model is applied to the electricity market. • Volatility parameters of the HJM model are estimated by using German data. • The model captures the seasonal price behaviour. • Electricity futures prices are forecasted. • Call options are evaluated according to different strike prices. - Abstract: The liberalization of electricity markets gave rise to new patterns of futures prices and the need of models that could efficiently describe price dynamics grew exponentially, in order to improve decision making for all of the agents involved in energy issues. Although there are papers focused on modelling electricity as a flow commodity by using Heath et al. (1992) approach in order to price futures contracts, the literature is scarce on attempts to consider a seasonal volatility as input to models. In this paper, we propose a futures price model that allows looking into observed stylized facts in the electricity market, in particular stochastic price variability, and periodic behavior. We consider a seasonal path-dependent volatility for futures returns that are modelled in Heath et al. (1992) framework and we obtain the dynamics of futures prices. We use these series to price the underlying asset of a call option in a risk management perspective. We test the model on the German electricity market, and we find that it is accurate in futures and option value estimates. In addition, the obtained results and the proposed methodology can be useful as a starting point for risk management or portfolio optimization under uncertainty in the current context of energy markets.

Spikes and memory in (Nord Pool) electricity price spot prices

DEFF Research Database (Denmark)

Proietti, Tomasso; Haldrup, Niels; Knapik, Oskar

Electricity spot prices are subject to transitory sharp movements commonly referred to as spikes. The paper aims at assessing their effects on model based inferences and predictions, with reference to the Nord Pool power exchange. We identify a spike as a price value which deviates substantially...

Cross hedging and forward-contract pricing of electricity

International Nuclear Information System (INIS)

Woo, C.-K.; Hoang, K.; Horowitz, I.

2001-01-01

We consider the problem of an electric-power marketer offering a fixed-price forward contract to provide electricity that it purchases from a potentially volatile and unpredictable fledgling spot energy market. One option for the risk-averse marketer who wants to hedge against the spot-price volatility is to engage in cross hedging to reduce the contract's profit variance, and to determine the forward-contract price as a risk-adjusted price - the sum of a baseline price and a risk premium. We show how the marketer can estimate the spot-price relationship between two wholesale energy markets for the purpose of cross hedging, as well as the optimal hedge and the forward contract's baseline price and risk premium

Short run pricing in competitive electricity markets

International Nuclear Information System (INIS)

Ring, B. J.; Read, E. G.

1996-01-01

In response to the need for more responsive, competitive and decentralized pricing strategies forced upon the industry by deregulation, this study reviewed the type of electricity pricing required to coordinate a competitive wholesale electricity market over time periods typically of the order of one hour. It was found that nodal spot pricing can provide a straight-forward mechanism for providing the correct signals to market participants, while reflecting the costs and complexities of transmission network operation. Provided that all binding constraints are represented in the pricing model, and assuming that they are used in conjunction with long term contracts and capacity rights, such pricing can potentially deliver most of the benefits promised by perfect coordination, while allowing competition to flourish. 4 refs

The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany

International Nuclear Information System (INIS)

Sensfuss, Frank; Ragwitz, Mario; Genoese, Massimo

2008-01-01

The German feed-in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies. Critics state that the costs for consumers are too high. An important aspect to be considered in the discussion is the price effect created by renewable electricity generation. This paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in Germany. The central aspect to be analysed is the impact of renewable electricity generation on spot market prices. The results generated by an agent-based simulation platform indicate that the financial volume of the price reduction is considerable. In the short run, this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits. In the case of the year 2006, the volume of the merit-order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers. (author)

Regime Jumps in Electricity Prices

NARCIS (Netherlands)

R. Huisman (Ronald); R.J. Mahieu (Ronald)

2001-01-01

textabstractElectricity prices are known to be very volatile and subject to frequent jumps due to system breakdown, demand shocks, and inelastic supply. As many international electricity markets are in some state of deregulation, more and more participants in these markets are exposed to these

Electricity pricing: optimal operation and investment by industrial consumers

Energy Technology Data Exchange (ETDEWEB)

Outhred, H.R.; Kaye, R.J.; Sutanto, D.; Manimaran, R.; Bannister, C.H.; Lee, Y.B.

1988-08-01

Ongoing research in the areas of economically efficient electricity pricing and industrial consumer response is described. A new electricity pricing theory is described that incorporates future uncertainty and intertemporal linkages between decisions. It indicates that electricity prices should contain two terms - short-run marginal cost plus a term that reflects how each particular decision is likely to affect future global welfare. A practical implementation using spot prices and forward contracts plus financial instruments for risk sharing and decision coordination is explored, and a procedure for developing long-term pricing policy is considered. The operation of industrial plant has been investigated and models developed to optimize plant behaviour in response to spot prices and forward contracts for electricity. These models are described and results of simulation studies discussed. The economic efficiency and risk sharing advantages of this advanced tariff structure compared with a conventional time-of-use tariff are illustrated.

Distributional incidence of green electricity price subsidies in China

International Nuclear Information System (INIS)

Wang, Feng; Zhang, Bing

2016-01-01

Distributional incidences are fundamental to environmental and energy policies, a condition that has led to controversies on the equity of environmental and energy policy. Using data from China's Urban Household Income and Expenditure Survey data from 2007, this study quantified the distributional effects of the green electricity price subsidy policy among Chinese urban household and compared its effects by using lifetime income and annual income to classify households, respectively. The results show that total electricity subsidies are mainly driven by indirect electricity subsidies. By using lifetime income to classify households, subsidies to households in the poorest two groups accounted for less than 10.2% of the total subsidies, whereas money distributed to households in the top two deciles reached 35.4%. The comparison using annual income to group households also demonstrated the similar impact of the green electricity price subsidy policy. China’s future market reforms should allow electricity prices to reflect pollution abatement costs. Additionally, a multi-step block electricity price schedule can reduce the regressivity of the policy. - Highlights: • We quantified the distributional effects of the green electricity price subsidy. • The distributional effects of different income groups were compared. • The poorest two groups accounted for less than 10.2% of the total subsidies. • The green electricity price subsidy policy benefited the rich at household level.

Comparison of extended mean-reversion and time series models for electricity spot price simulation considering negative prices

International Nuclear Information System (INIS)

Keles, Dogan; Genoese, Massimo; Möst, Dominik; Fichtner, Wolf

2012-01-01

This paper evaluates different financial price and time series models, such as mean reversion, autoregressive moving average (ARMA), integrated ARMA (ARIMA) and general autoregressive conditional heteroscedasticity (GARCH) process, usually applied for electricity price simulations. However, as these models are developed to describe the stochastic behaviour of electricity prices, they are extended by a separate data treatment for the deterministic components (trend, daily, weekly and annual cycles) of electricity spot prices. Furthermore price jumps are considered and implemented within a regime-switching model. Since 2008 market design allows for negative prices at the European Energy Exchange, which also occurred for several hours in the last years. Up to now, only a few financial and time series approaches exist, which are able to capture negative prices. This paper presents a new approach incorporating negative prices. The evaluation of the different approaches presented points out that the mean reversion and the ARMA models deliver the lowest mean root square error between simulated and historical electricity spot prices gained from the European Energy Exchange. These models posses also lower mean average errors than GARCH models. Hence, they are more suitable to simulate well-fitting price paths. Furthermore it is shown that the daily structure of historical price curves is better captured applying ARMA or ARIMA processes instead of mean-reversion or GARCH models. Another important outcome of the paper is that the regime-switching approach and the consideration of negative prices via the new proposed approach lead to a significant improvement of the electricity price simulation. - Highlights: ► Considering negative prices improves the results of time-series and financial models for electricity prices. ► Regime-switching approach captures the jumps and base prices quite well. ► Removing and separate modelling of deterministic annual, weekly and daily

An Electricity Price Forecasting Model by Hybrid Structured Deep Neural Networks

Directory of Open Access Journals (Sweden)

Ping-Huan Kuo

2018-04-01

Full Text Available Electricity price is a key influencer in the electricity market. Electricity market trades by each participant are based on electricity price. The electricity price adjusted with the change in supply and demand relationship can reflect the real value of electricity in the transaction process. However, for the power generating party, bidding strategy determines the level of profit, and the accurate prediction of electricity price could make it possible to determine a more accurate bidding price. This cannot only reduce transaction risk, but also seize opportunities in the electricity market. In order to effectively estimate electricity price, this paper proposes an electricity price forecasting system based on the combination of 2 deep neural networks, the Convolutional Neural Network (CNN and the Long Short Term Memory (LSTM. In order to compare the overall performance of each algorithm, the Mean Absolute Error (MAE and Root-Mean-Square error (RMSE evaluating measures were applied in the experiments of this paper. Experiment results show that compared with other traditional machine learning methods, the prediction performance of the estimating model proposed in this paper is proven to be the best. By combining the CNN and LSTM models, the feasibility and practicality of electricity price prediction is also confirmed in this paper.

Cross hedging and forward-contract pricing of electricity

Energy Technology Data Exchange (ETDEWEB)

Woo, C.-K.; Hoang, K. [Energy and Environmental Economics, Inc., 353 Sacramento Street, Suite 1700, 94111 San Francisco, CA (United States); Horowitz, I. [Decision and Information Sciences, Warrington College of Business Administration, University of Florida, 32611 Gainesville, FL (United States)

2001-01-01

We consider the problem of an electric-power marketer offering a fixed-price forward contract to provide electricity that it purchases from a potentially volatile and unpredictable fledgling spot energy market. One option for the risk-averse marketer who wants to hedge against the spot-price volatility is to engage in cross hedging to reduce the contract's profit variance, and to determine the forward-contract price as a risk-adjusted price - the sum of a baseline price and a risk premium. We show how the marketer can estimate the spot-price relationship between two wholesale energy markets for the purpose of cross hedging, as well as the optimal hedge and the forward contract's baseline price and risk premium.

Electricity prices in a competitive market: a preliminary analysis of the deregulated Thai electricity industry

International Nuclear Information System (INIS)

Pipattanasomporn, M.; Ongsakul, W.; Pacudan, R.; Lefevre, T.

2000-01-01

The electricity industry throughout the world is currently undergoing a significant transition towards restructuring and deregulation. Following this new legislation, Thailand has initiated an institutional and structural reform with a belief that this could be the best way forward for the Thai electricity supply industry (ESI) to improve efficiency, lower electricity prices, and tackle financial debts. This paper presents an analysis of the extent to which prices for generation services in a competitive market may differ from regulated electricity prices, if competitive prices are based on marginal costs and regulated prices are based on average costs, by using Thailand as a case study. (Author)

Real-time pricing when some consumers resist in saving electricity

International Nuclear Information System (INIS)

Salies, Evens

2013-01-01

Successful real-time electricity pricing depends firstly upon consumers' willingness to subscribe to such terms and, secondly, on their ability to curb consumption levels. The present paper addresses both issues by considering consumers differentiated by their electricity saving costs, half of whom resist saving electricity. We demonstrate that when consumers are free to adopt real-time prices, producers prefer charging inefficient prices and, in so doing, discriminate against that portion of the consumer population which faces no saving costs. We also find that efficient marginal cost pricing is feasible, but is incompatible with mass adoption of real-time prices. - Highlights: • We model consumers switching from uniform to real-time electricity pricing (RTP). • Half the consumer population is pro-RTP and half resists saving electricity. • Efficient RTP is feasible but is incompatible with mass adoption

Prices and tariffs in a liberalized electricity market

International Nuclear Information System (INIS)

Rijkers, F.; Wals, A.; Battjes, C.; Scheepers, M.

2000-01-01

First, it is described how prices and tariffs were determined before the introduction of the liberalization. Next, a brief overview is given of the transfer to the liberalized market and how the situation is on this market at present. Special attention is paid to the pricing of electricity in a free market, which is determined by competition between electricity producers in the Netherlands and abroad. Finally, a comparison is made between the expected prices and tariffs in a liberalized market and the prices before the liberalization

The impact of renewable energies on EEX day-ahead electricity prices

International Nuclear Information System (INIS)

Paraschiv, Florentina; Erni, David; Pietsch, Ralf

2014-01-01

In this paper, we analyze the impact of renewable energies, wind and photovoltaic, on the formation of day-ahead electricity prices at EEX. We give an overview of the policy decisions concerning the promotion of renewable energy sources in Germany and discuss their consequences on day-ahead prices. An analysis of electricity spot prices reveals that the introduction of renewable energies enhances extreme price changes. In the frame of a dynamic fundamental model, we show that there has been a continuous electricity price adaption process to market fundamentals. Furthermore, the fundamental drivers of prices differ among hours with different load profiles. Our results imply that renewable energies decrease market spot prices and have implications on the traditional fuel mix for electricity production. However, the prices for the final consumers increased overall because they must pay in addition the feed-in tariffs for the promotion of renewable energy. - Highlights: • We analyze the impact of renewable energies on the day-ahead electricity prices at EEX. • We discuss the impact of renewables on day-ahead prices. • We show a continuous electricity price adaption process to market fundamentals. • Renewable energies decrease market spot prices and shift the merit order curve. • The prices for the final consumers however increased because of feed-in tariffs

Electricity price and tariff problems and approaches to their solving

International Nuclear Information System (INIS)

Piha, M.

1994-01-01

The following problems are discussed: (i) integrity of the tariff system, price setting and price control in relation to the secondary market; (ii) long-term contracting relations between the subjects - primary and secondary market entities; (iii) the setting of electricity purchase prices from independent producers; (iv) international integration of national systems, including electricity import prices; (v) cross-subsidies within the system; (vi) identification of adverse environmental impacts and their remediation by incorporating the associated costs into electricity prices; (vii) the cost basis of prices; (viii) objectivization of the cost basis; (ix) unification/diversification of the price and tariff levels and the associated distribution rent problem; (x) rational structure of the tariff system with respect to its complexity and ties to the measuring and control instrumentation and their efficiency; and (xi) breakdown of the costs of heat and electricity cogeneration and a fair price setting. (J.B.)

The effect of electricity prices on industry in Germany

International Nuclear Information System (INIS)

Roepenack, A. von

1992-01-01

The contribution gives a survey of the general consumption of electricity in the (former) Federal Republic of Germany from 1980 until 1990 and illustrates the effect of electricity prices on industry - safety of the site, competition, influences on prices for electricity, intensity of electricity, comparison to gross increase in value. In addition, the influence of politics on electricity prices is examined. Among other things, we owe the success of our industry on the international market to the increase in our use of electric power. This is the basis of our success in rationalization and our status on the world market. The dependency of industry and industrial products on this form of energy has increased and will continue to do so. Thus the politicians have little room to act if they do not want to influence industry in a negative way. On the basis of the situation described here, electricity prices which are competitive internationally are an essential prerequisite for the future of our economy. (orig./HSCH) [de

Assessment of emission trading impacts on competitive electricity market price

DEFF Research Database (Denmark)

Singh, S.N.; Saxena, D.; Østergaard, Jacob

2011-01-01

analyzes the impact of electricity prices in the competitive electricity markets having a uniform market clearing price mechanism. Findings - It is found that the electricity prices depend on the system loading, generation mix, etc. at a particular hour. Various emission trading instruments are discussed...... side emission trading impact on electricity prices in the competitive power market. Design/methodology/approach - Various schemes are suggested and are being implemented to achieve this objective. It is expected that electricity price will increase due to imposition of emission taxes. This paper...... with a special emphasis on the European market. Research limitations/implications - Block bidding of the suppliers is considered whereas the demand is assumed to be inelastic. Originality/value - The emission trading impacts are analyzed on a simple example....

A hybrid approach for probabilistic forecasting of electricity price

DEFF Research Database (Denmark)

Wan, Can; Xu, Zhao; Wang, Yelei

2014-01-01

to the nonstationarities involved in market clearing prices (MCPs), it is rather difficult to accurately predict MCPs in advance. The challenge is getting intensified as more and more renewable energy and other new technologies emerged in smart grids. Therefore transformation from traditional point forecasts...... electricity price forecasting is proposed in this paper. The effectiveness of the proposed hybrid method has been validated through comprehensive tests using real price data from Australian electricity market.......The electricity market plays a key role in realizing the economic prophecy of smart grids. Accurate and reliable electricity market price forecasting is essential to facilitate various decision making activities of market participants in the future smart grid environment. However, due...

Nodal pricing in a coupled electricity market

OpenAIRE

Bjørndal, Endre; Bjørndal, Mette; Cai, Hong

2014-01-01

This paper investigates a pricing model for an electricity market with a hybrid congestion management method, i.e. part of the system applies a nodal pricing scheme and the rest applies a zonal pricing scheme. The model clears the zonal and nodal pricing areas simultaneously. The nodal pricing area is affected by the changes in the zonal pricing area since it is directly connected to the zonal pricing area by commercial trading. The model is tested on a 13-node power system. Within the area t...

Demand side management in recycling and electricity retail pricing

Science.gov (United States)

Kazan, Osman

This dissertation addresses several problems from the recycling industry and electricity retail market. The first paper addresses a real-life scheduling problem faced by a national industrial recycling company. Based on their practices, a scheduling problem is defined, modeled, analyzed, and a solution is approximated efficiently. The recommended application is tested on the real-life data and randomly generated data. The scheduling improvements and the financial benefits are presented. The second problem is from electricity retail market. There are well-known patterns in daily usage in hours. These patterns change in shape and magnitude by seasons and days of the week. Generation costs are multiple times higher during the peak hours of the day. Yet most consumers purchase electricity at flat rates. This work explores analytic pricing tools to reduce peak load electricity demand for retailers. For that purpose, a nonlinear model that determines optimal hourly prices is established based on two major components: unit generation costs and consumers' utility. Both are analyzed and estimated empirically in the third paper. A pricing model is introduced to maximize the electric retailer's profit. As a result, a closed-form expression for the optimal price vector is obtained. Possible scenarios are evaluated for consumers' utility distribution. For the general case, we provide a numerical solution methodology to obtain the optimal pricing scheme. The models recommended are tested under various scenarios that consider consumer segmentation and multiple pricing policies. The recommended model reduces the peak load significantly in most cases. Several utility companies offer hourly pricing to their customers. They determine prices using historical data of unit electricity cost over time. In this dissertation we develop a nonlinear model that determines optimal hourly prices with parameter estimation. The last paper includes a regression analysis of the unit generation cost

Battery prices and capacity sensitivity: Electric drive vehicles

DEFF Research Database (Denmark)

Juul, Nina

2012-01-01

, the prices at which the electric drive vehicles become of interest to the power system are found. Smart charge, including the opportunity to discharge (vehicle-to-grid) is used in all scenarios. Analyses show that the marginal benefits decrease the larger the battery. For very high battery prices, large......The increase in fluctuating power production requires an increase in flexibility in the system as well. Flexibility can be found in generation technologies with fast response times or in storage options. In the transport sector, the proportion of electric drive vehicles is expected to increase over...... the next decade or two. These vehicles can provide some of the flexibility needed in the power system, in terms of both flexible demand and electricity storage. However, what are the batteries worth to the power system? And does the value depend on battery capacity? This article presents an analysis...

Estimation of Iranian price elasticities of residential electricity demand

Directory of Open Access Journals (Sweden)

Yeganeh Mousavi Jahromi

2014-06-01

Full Text Available This paper presents a study to determine demand for electricity in city of Yazd, Iran over the period of 1998-2008. Using vector error correction model (VECM based on seasonal information, the study determines that electricity has no elasticity in short term in household expenditure. Therefore, government policy on increasing price of electricity will not influence demand. However, electricity maintains elasticity over the long-term period and an increase on price of electricity could motivate consumers to reduce their consumption by purchasing energy efficient facilities. Therefore, any governmental strategy to increase price may have positive impact on economy. The study also detects a positive and meaningful relationship between temperature and electricity consumption.

Estimating the volatility of electricity prices: The case of the England and Wales wholesale electricity market

International Nuclear Information System (INIS)

Tashpulatov, Sherzod N.

2013-01-01

Price fluctuations that partially comove with demand are a specific feature inherent to liberalized electricity markets. The regulatory authority in Great Britain, however, believed that sometimes electricity prices were significantly higher than what was expected and, therefore, introduced price-cap regulation and divestment series. In this study, I analyze how the introduced institutional changes and regulatory reforms affected the dynamics of daily electricity prices in the England and Wales wholesale electricity market during 1990–2001. This research finds that the introduction of price-cap regulation did achieve the goal of lowering the price level at the cost of higher price volatility. Later, the first series of divestments is found to be successful at lowering price volatility, which however happens at the cost of a higher price level. Finally, this study also documents that the second series of divestments was more successful at lowering both the price level and volatility. - Author-Highlights: • The impact of regulation on the dynamics of electricity prices is examined. • Price-cap regulation has decreased the level at the cost of higher volatility. • The first series of divestments has reversed the trade-off. • The reversed trade-off is explained as an indication of tacit collusion. • The second series of divestments is found generally successful

Simultaneous day-ahead forecasting of electricity price and load in smart grids

International Nuclear Information System (INIS)

Shayeghi, H.; Ghasemi, A.; Moradzadeh, M.; Nooshyar, M.

2015-01-01

Highlights: • This paper presents a novel MIMO-based support vector machine for forecasting. • Considered uncertainties for better simulation for filtering in input data. • Used LSSVM technique for learning. • Proposed a new modification for standard artificial bee colony algorithm to optimize LSSVM engine. - Abstract: In smart grids, customers are promoted to change their energy consumption patterns by electricity prices. In fact, in this environment, the electricity price and load consumption are highly corrected such that the market participants will have complex model in their decisions to maximize their profit. Although the available forecasting mythologies perform well in electricity market by way of little or no load and price interdependencies, but cannot capture load and price dynamics if they exist. To overcome this shortage, a Multi-Input Multi-Output (MIMO) model is presented which can consider the correlation between electricity price and load. The proposed model consists of three components known as a Wavelet Packet Transform (WPT) to make valuable subsets, Generalized Mutual Information (GMI) to select best input candidate and Least Squares Support Vector Machine (LSSVM) based on MIMO model, called LSSVM-MIMO, to make simultaneous load and price forecasts. Moreover, the LSSVM-MIMO parameters are optimized by a novel Quasi-Oppositional Artificial Bee Colony (QOABC) algorithm. Some forecasting indices based on error factor are considered to evaluate the forecasting accuracy. Simulations carried out on New York Independent System Operator, New South Wales (NSW) and PJM electricity markets data, and showing that the proposed hybrid algorithm has good potential for simultaneous forecasting of electricity price and load

Electricity price forecast using Combinatorial Neural Network trained by a new stochastic search method

International Nuclear Information System (INIS)

Abedinia, O.; Amjady, N.; Shafie-khah, M.; Catalão, J.P.S.

2015-01-01

Highlights: • Presenting a Combinatorial Neural Network. • Suggesting a new stochastic search method. • Adapting the suggested method as a training mechanism. • Proposing a new forecast strategy. • Testing the proposed strategy on real-world electricity markets. - Abstract: Electricity price forecast is key information for successful operation of electricity market participants. However, the time series of electricity price has nonlinear, non-stationary and volatile behaviour and so its forecast method should have high learning capability to extract the complex input/output mapping function of electricity price. In this paper, a Combinatorial Neural Network (CNN) based forecasting engine is proposed to predict the future values of price data. The CNN-based forecasting engine is equipped with a new training mechanism for optimizing the weights of the CNN. This training mechanism is based on an efficient stochastic search method, which is a modified version of chemical reaction optimization algorithm, giving high learning ability to the CNN. The proposed price forecast strategy is tested on the real-world electricity markets of Pennsylvania–New Jersey–Maryland (PJM) and mainland Spain and its obtained results are extensively compared with the results obtained from several other forecast methods. These comparisons illustrate effectiveness of the proposed strategy.

Forecasting Long-Run Electricity Prices

International Nuclear Information System (INIS)

Hamm, Gregory; Borison, Adam

2006-01-01

Estimation of long-run electricity prices is extremely important but it is also very difficult because of the many uncertainties that will determine future prices, and because of the lack of sufficient historical and forwards data. The difficulty is compounded when forecasters ignore part of the available information or unnecessarily limit their thinking about the future. The authors present a practical approach that addresses these problems. (author)

Did the expiration of retail price caps affect prices in the restructured Texas electricity market?

International Nuclear Information System (INIS)

Kang, Linhong; Zarnikau, Jay

2009-01-01

On January 1, 2007, the Electric Reliability Council of Texas (ERCOT) market became the first restructured market in the US to completely remove caps on the prices which could be charged to residential energy consumers by the retailers associated with the traditional or incumbent utility service providers. Our analysis suggests that the expiration of the price-to-beat (PTB) price caps may have led to a reduction in the average prices charged by competitive retail electric providers (REPs). (author)

Crisis of prices in electrical sector

International Nuclear Information System (INIS)

2002-01-01

This presentation shows the evolution of the electrical sector in Guatemala including prices, covering, market and current situation with the recent privatization of public enterprises with advantages to the consumers. Also discuss the effect of the new legislation with fiscal proposals that could produce prices distortion

Pricing of electricity tariffs in competitive markets

International Nuclear Information System (INIS)

Keppo, J.; Raesaenen, M.

1999-01-01

In many countries electricity supply business has been opened for competition. In this paper we analyze the problem of pricing of electricity tariffs in these open markets, when both the customers' electricity consumption and the market price are stochastic processes. Specifically, we focus on regular tariff contracts which do not have explicit amounts of consumption units defined in the contracts. Therefore the valuation process of these contracts differs from the valuation of electricity futures and options. The results show that the more there is uncertainty about the customer's consumption, the higher the fixed charge of the tariff contract should be. Finally, we analyze the indication of our results to the different methods for estimating the customer's consumption in the competitive markets. Since the consumption uncertainties enter into the tariff prices, the analysis indicates that the deterministic standard load curves do not provide efficient methods for evaluating the customers' consumption in competitive markets

Electricity prices in France: past trends and perspectives

International Nuclear Information System (INIS)

2014-03-01

At a time when the European Commission has published a complete report about energy prices in Europe, presenting their evolution during the past years, this article aims to recall the basic principles structuring the electricity bill in France, and to put the French electricity prices in their European context

The evolution of electricity prices in an uncertain world. Contracting and managing the price risk

International Nuclear Information System (INIS)

Vassilopoulos, Ph.; Rapin, D.

2004-01-01

With the liberalization of the electricity market, the large industrial consumers saw their electric bill changing nature. Before, this price reflected a long term negotiation with the monopoly, now it is established in a free way via wholesale markets. This evolution marks a transfer of the management of price risk from the producer towards the consumer. This change is not in itself a problem if the hedging instruments are adapted. We note a contamination of the price of the derivative products by the spot while at the same time the traditional relation between cash and term is not always valid for electricity because of its non storability. When well even the price of the derivative products would be formed in an autonomous way, it poses a second problem: that of their indexing on price references like Platt's whose result is assimilated more to a survey of large producers than a true confrontation of supply and demand. This article proposes to examine this change of nature and behaviour of electricity prices. After having explained the intrinsically volatile characteristic of spot prices, we will recall that the products in the long term are not always optimal solutions to decrease this price risk. Lastly, we will highlight a solution of skirting at the risks mentioned above: contracting between producers and consumers. (authors)

Electricity prices and fuel costs. Long-run relations and short-run dynamics

International Nuclear Information System (INIS)

Mohammadi, Hassan

2009-01-01

The paper examines the long-run relation and short-run dynamics between electricity prices and three fossil fuel prices - coal, natural gas and crude oil - using annual data for the U.S. for 1960-2007. The results suggest (1) a stable long-run relation between real prices for electricity and coal (2) Bi-directional long-run causality between coal and electricity prices. (3) Insignificant long-run relations between electricity and crude oil and/or natural gas prices. And (4) no evidence of asymmetries in the adjustment of electricity prices to deviations from equilibrium. A number of implications are addressed. (author)

Impact of optimal load response to real-time electricity price on power system constraints in Denmark

DEFF Research Database (Denmark)

Hu, Weihao; Chen, Zhe; Bak-Jensen, Birgitte

2010-01-01

Since the hourly spot market price is available one day ahead in Denmark, the price could be transferred to the consumers and they may shift their loads from high price periods to the low price periods in order to save their energy costs. The optimal load response to a real-time electricity price...... and may represent the future of electricity markets in some ways, is chosen as the studied power system in this paper. A distribution system where wind power capacity is 126% of maximum loads is chosen as the study case. This paper presents a nonlinear load optimization method to real-time power price...... for demand side management in order to save the energy costs as much as possible. Simulation results show that the optimal load response to a real-time electricity price has some good impacts on power system constraints in a distribution system with high wind power penetrations....

An analysis of the impact of Renewable Portfolio Standards on residential electricity prices

Science.gov (United States)

Larson, Andrew James

well as the amount of renewable energy generated in each state. There are several implications of this analysis that are relevant for policy makers who seek to gain the environmental benefits of these policies, but who are also concerned with the costs those polices may impose on consumers of electricity. First, allowing utilities as much time as possible to comply with the mandates of the RPS will mitigate the price increases associated with implementation of and compliance with the policy. Secondly, policy makers need not fear imposing high targets for their RPS as this is not associated with higher electricity prices. Finally, policy makers should be concerned with the bindingness of the policies they impose. States with non-binding policies tend to have higher electricity prices, likely due to the costs of early compliance. As such imposing interim targets may raise rates more than simply allowing compliance at a pace utilities can bear without substantially increasing prices.

A vector autoregressive model for electricity prices subject to long memory and regime switching

International Nuclear Information System (INIS)

Haldrup, Niels; Nielsen, Frank S.; Nielsen, Morten Oerregaard

2010-01-01

A regime dependent VAR model is suggested that allows long memory (fractional integration) in each of the observed regime states as well as the possibility of fractional cointegration. The model is motivated by the dynamics of electricity prices where the transmission of power is subject to occasional congestion periods. For a system of bilateral prices non-congestion means that electricity prices are identical whereas congestion makes prices depart. Hence, the joint price dynamics implies switching between a univariate price process under non-congestion and a bivariate price process under congestion. At the same time, it is an empirical regularity that electricity prices tend to show a high degree of long memory, and thus that prices may be fractionally cointegrated. Analysis of Nord Pool data shows that even though the prices are identical under non-congestion, the prices are not, in general, fractionally cointegrated in the congestion state. Hence, in most cases price convergence is a property following from regime switching rather than a conventional error correction mechanism. Finally, the suggested model is shown to deliver forecasts that are more precise compared to competing models. (author)

ELMO model predicts the price of electric power

International Nuclear Information System (INIS)

Antila, H.

2001-01-01

Electrowatt-Ekono has developed a new model, by which it is possible to make long-term prognoses on the development of electricity prices in the Nordic Countries. The ELMO model can be used as an analysis service of the electricity markets and estimation of the profitability of long-term power distribution contracts with different scenarios. It can also be applied for calculation of technical and economical fundamentals for new power plants, and for estimation of the effects of different taxation models on the emissions of power generation. The model describes the whole power generation system, the power and heat consumption and transmission. The Finnish power generation system is based on the Electrowatt-Ekono's boiler database by combining different data elements. Calculation is based on the assumption that the Nordic power generation system is used optimally, and that the production costs are minimised. In practise the effectively operated electricity markets ensure the optimal use of the production system. The market area to be described consists of Finland and Sweden. The spot prices have long been the same. Norway has been treated as a separate market area. The most potential power generation system, the power consumption and the power transmission system are presumed for the target year during a normal rainfall situation. The basic scenario is calculated on the basis of the preconditional data. The calculation is carried out on hourly basis, which enables the estimation of the price variation of electric power between different times during the day and seasons. The system optimises the power generation on the basis of electricity and heat consumption curves and fuel prices. The result is an hourly limit price for electric power. Estimates are presented as standard form reports. Prices are presented as average annuals, in the seasonal base, and in hourly or daily basis for different seasons

Basic Studies on Chaotic Characteristics of Electric Power Market Price

Science.gov (United States)

Takeuchi, Yuya; Miyauchi, Hajime; Kita, Toshihiro

Recently, deregulation and reform of electric power utilities have been progressing in many parts of the world. In Japan, partial deregulation has been started from generation sector since 1995 and partial deregulation of retail sector is executed through twice law revisions. Through the deregulation, because electric power is traded in the market and its price is always fluctuated, it is important for the electric power business to analyze and predict the price. Although the price data of the electric power market is time series data, it is not always proper to analyze by the linear model such as ARMA because the price sometimes changes suddenly. Therefore, in this paper, we apply the methods of chaotic time series analysis, one of non-linear analysis methods, and investigate the chaotic characteristics of the system price of JEPX.

Regionally-varying and regionally-uniform electricity pricing policies compared across four usage categories

International Nuclear Information System (INIS)

Cho, Seong-Hoon; Kim, Taeyoung; Kim, Hyun Jae; Park, Kihyun; Roberts, Roland K.

2015-01-01

The objective of our research is to predict how electricity demand varies spatially between status quo regionally-uniform electricity pricing and hypothetical regionally-varying electricity pricing across usage categories. We summarize the empirical results of a case study of electricity demand in South Korea with three key findings and their related implications. First, the price elasticities of electricity demand differ across usage categories. Specifically, electricity demands for manufacturing and retail uses are price inelastic and close to unit elastic, respectively, while those for agricultural and residential uses are not statistically significant. This information is important in designing energy policy, because higher electricity prices could reduce electricity demands for manufacturing and retail uses, resulting in slower growth in those sectors. Second, spatial spillovers in electricity demand vary across uses. Understanding the spatial structure of electricity demand provides useful information to energy policy makers for anticipating changes in demand across regions via regionally-varying electricity pricing for different uses. Third, simulation results suggest that spatial variations among electricity demands by usage category under a regionally-varying electricity-pricing policy differ from those under a regionally-uniform electricity-pricing policy. Differences in spatial changes between the policies provide information for developing a realistic regionally-varying electricity-pricing policy according to usage category. - Highlights: • We compare regionally-varying and regionally-uniform electricity pricing policies. • We summarize empirical results of a case study of electricity demand in South Korea. • We confirm that spatial spillovers in electricity demands vary across different uses. • We find positive spatial spillovers in the manufacturing and residential sectors. • Our methods help policy makers evaluate regionally-varying pricing

Inefficient and opaque price formation in the Japan Electric Power Exchange

International Nuclear Information System (INIS)

Nakajima, Tadahiro

2013-01-01

This study examines whether the spot prices in the Japan Electric Power Exchange are efficiently formed from April 3, 2006, to March 31, 2012, using the conventional and rank-based variance-ratio tests. The results seem to reject the efficient market hypothesis in the market. Moreover, by applying Granger-causality tests, this paper investigates whether the power price is determined from the information of primary energy and exchange markets that directly affect the cost of power generation. The results indicate no Granger-causality from the prices of oil and gas and the exchange rate to the price of electricity. Finally, this paper discusses the factors that lead to inefficient and mysterious price formation. - Highlights: ► This study examines the wholesale electricity market in Japan. ► Efficient market hypothesis is rejected. ► Prices of imported fuel do not Granger-cause the prices of electricity. ► The WTI prices and the exchange rates do not Granger-cause the power prices

Income and price elasticities of electricity demand: Aggregate and sector-wise analyses

Energy Technology Data Exchange (ETDEWEB)

Jamil, Faisal, E-mail: fsljml@hotmail.com [School of Economics, Quaid-e-Azam University, Islamabad (Pakistan); Ahmad, Eatzaz, E-mail: eatzaz@qau.edu.pk [School of Economics, Quaid-e-Azam University, Islamabad (Pakistan)

2011-09-15

Cointegration and vector error correction modeling approaches are widely used in electricity demand analysis. The study rigorously examines the determinants of electricity demand at aggregate and sectoral levels in Pakistan. In the backdrop of severe electricity shortages, our empirical findings give support to the existence of a stable long-run relationship among the variables and indicate that electricity demand is elastic in the long run to both income and price at aggregate level. At sectoral level, long-run income and price elasticity estimates follow this pattern except in agricultural sector, where electricity demand is found elastic to output but inelastic to electricity price. On the contrary, the coefficients for income and price are rather small and mostly insignificant in the short run. We employed temperature index, price of diesel oil and capital stock at aggregate and sectoral levels as exogenous variables. These variables account for most of the variations in electricity demand in the short run. It shows that mechanization of the economy significantly affect the electricity demand at macro level. Moreover, elastic electricity demand with respect to electricity price in most of the sectors implies that electricity price as a policy tool can be used for efficient use and conservation. - Highlights: > The study conducts analysis for aggregate and four sectors. > Sectoral analyses are for residential, commercial, manufacturing and agricultural sectors. > We obtained higher positive income and negative price elasticity in the long run. > The higher price elasticity implies that price can be used as a policy tool. > Capital stock and temperature variables explain most of the short-run demand fluctuations.

PRICING ELECTRIC POWER UNDER A HYBRID WHOLESALE MECHANISM: EVALUATING THE TURKISH ELECTRICITY MARKET

Directory of Open Access Journals (Sweden)

Hatice Karahan

2013-01-01

Full Text Available During the restructuring process, Turkish electricity sector has gone through significant changes both in wholesale and retail markets. In this framework, the Market Financial Settlement Mechanism established for handling market imbalances has become a spot market in time. So, it can be claimed that the wholesale electricity market in Turkey is a hybrid mechanism composed of bilateral contracts and the balancing market. On the other hand, the main target of liberalization program is providing consumers with affordable electric power. Hence, this study attempts to explore the link between retail tariffs for ineligible consumers and prices in the two wholesale mechanisms, in the period after the launch of the day-ahead market. Findings suggest that regulated wholesale prices are more effective in the determination of end-user prices, whereas unregulated ones might have a price reduction effect in case the free market dominates. However, the volatility in spot market prices implies that the sector would better continue with the hybrid mechanism for quite some time.

A counterfactual price analysis of British electricity privatisation

International Nuclear Information System (INIS)

Branston, J.R.

2000-01-01

The aim of this paper is to challenge the widely held view that electricity privatisation in Great Britain (comprised of the markets of England and Wales, and Scotland) was beneficial simply because the price of electricity has subsequently fallen in real terms. This is carried out by comparing the electricity prices actually observed with those that might have been charged had the industry remained in public ownership. In order to do this the paper develops a counterfactual scenario for the likely decisions and effects of a publicly owned industry. This leads the paper to conclude that observed prices are indeed significantly higher than they would have been had privatisation not occurred. (author)

Modeling of demand response in electricity markets : effects of price elasticity

International Nuclear Information System (INIS)

Banda, E.C.; Tuan, L.A.

2007-01-01

A design mechanism for the optimal participation of customer load in electricity markets was presented. In particular, this paper presented a modified market model for the optimal procurement of interruptible loads participating in day-ahead electricity markets. The proposed model considers the effect of price elasticity and demand-response functions. The objective was to determine the role that price elasticity plays in electricity markets. The simulation model can help the Independent System Operator (ISO) identify customers offering the lowest price of interruptible loads and load flow patterns that avoid problems associated with transmission congestion and transmission losses. Various issues associated with procurement of demand-response offerings such as advance notification, locational aspect of load, and power factor of the loads, were considered. It was shown that demand response can mitigate price volatility by allowing the ISO to maintain operating reserves during peak load periods. It was noted that the potential benefits of the demand response program would be reduced when price elasticity of demand is taken into account. This would most likely occur in actual developed open electricity markets, such as Nordpool. This study was based on the CIGRE 32-bus system, which represents the Swedish high voltage power system. It was modified for this study to include a broad range of customer characteristics. 18 refs., 2 tabs., 14 figs

Carbon pricing, nuclear power and electricity markets

Energy Technology Data Exchange (ETDEWEB)

Cameron, R.; Keppler, J. H. [OECD Nuclear Energy Agency, 12, boulevard des Iles, 92130 Issy-les-Moulineaux (France)

2012-07-01

In 2010, the NEA in conjunction with the International Energy Agency produced an analysis of the Projected Costs of Electricity for almost 200 power plants, covering nuclear, fossil fuel and renewable electricity generation. That analysis used lifetime costs to consider the merits of each technology. However, the lifetime cost analysis is less applicable in liberalised markets and does not look specifically at the viewpoint of the private investor. A follow-up NEA assessment of the competitiveness of nuclear energy against coal- and gas-fired generation under carbon pricing has considered just this question. The economic competition in electricity markets is today between nuclear energy and gas-fired power generation, with coal-fired power generation not being competitive as soon as even modest carbon pricing is introduced. Whether nuclear energy or natural gas comes out ahead in their competition depends on a number of assumptions, which, while all entirely reasonable, yield very different outcomes. The analysis in this study has been developed on the basis of daily data from European power markets over the last five-year period. Three different methodologies, a Profit Analysis looking at historic returns over the past five years, an Investment Analysis projecting the conditions of the past five years over the lifetime of plants and a Carbon Tax Analysis (differentiating the Investment Analysis for different carbon prices) look at the issue of competitiveness from different angles. They show that the competitiveness of nuclear energy depends on a number of variables which in different configurations determine whether electricity produced from nuclear power or from CCGTs generates higher profits for its investors. These are overnight costs, financing costs, gas prices, carbon prices, profit margins (or mark-ups), the amount of coal with carbon capture and electricity prices. This paper will present the outcomes of the analysis in the context of a liberalised

Carbon pricing, nuclear power and electricity markets

International Nuclear Information System (INIS)

Cameron, R.; Keppler, J. H.

2012-01-01

In 2010, the NEA in conjunction with the International Energy Agency produced an analysis of the Projected Costs of Electricity for almost 200 power plants, covering nuclear, fossil fuel and renewable electricity generation. That analysis used lifetime costs to consider the merits of each technology. However, the lifetime cost analysis is less applicable in liberalised markets and does not look specifically at the viewpoint of the private investor. A follow-up NEA assessment of the competitiveness of nuclear energy against coal- and gas-fired generation under carbon pricing has considered just this question. The economic competition in electricity markets is today between nuclear energy and gas-fired power generation, with coal-fired power generation not being competitive as soon as even modest carbon pricing is introduced. Whether nuclear energy or natural gas comes out ahead in their competition depends on a number of assumptions, which, while all entirely reasonable, yield very different outcomes. The analysis in this study has been developed on the basis of daily data from European power markets over the last five-year period. Three different methodologies, a Profit Analysis looking at historic returns over the past five years, an Investment Analysis projecting the conditions of the past five years over the lifetime of plants and a Carbon Tax Analysis (differentiating the Investment Analysis for different carbon prices) look at the issue of competitiveness from different angles. They show that the competitiveness of nuclear energy depends on a number of variables which in different configurations determine whether electricity produced from nuclear power or from CCGTs generates higher profits for its investors. These are overnight costs, financing costs, gas prices, carbon prices, profit margins (or mark-ups), the amount of coal with carbon capture and electricity prices. This paper will present the outcomes of the analysis in the context of a liberalised

Efficient pricing and investment in electricity markets with intermittent resources

International Nuclear Information System (INIS)

Chao, Hung-po

2011-01-01

Facing growing technological and environmental challenges, the electricity industry needs effective pricing mechanism to promote efficient risk management and investment decisions. In a restructured electricity market with competitive wholesale prices and traditionally regulated retail rates, however, there are technical and institutional barriers that prevent dynamic pricing with price responsive demand. In regions with limited energy storage capacity, intermittent renewable resources present special challenges. This could adversely affect the effectiveness of public policies causing inefficient investments in energy technologies. In this paper, we present an updated economic model of pricing and investment in restructured electricity market and use the model in a simulation study for an initial assessment of renewable energy strategy and alternative pricing mechanisms. A key objective of the study is to shed light on the policy issues so that effective decisions can be made to improve efficiency. - Highlights: → Renewable resources present special challenges in regions with limited energy storage capacity. → This paper presents an updated economic model of pricing and investment in restructured electricity market. → A simulation study assesses renewable energy strategy and alternative pricing mechanisms. → The study results inform policy decisions to improve efficient investments in energy technologies.

The price of electricity from private power producers

Energy Technology Data Exchange (ETDEWEB)

Kahn, E.; Milne, A.; Kito, S.

1993-10-01

The long-term wholesale electricity market is becoming increasingly competitive. Bidding for power contracts has become a dominant form of competition in this sector. The prices which emerge from this process have not been documented and compared in a systematic framework. This paper introduces a method to make such comparisons and illustrates it on a small sample of projects. This results show a wide range of prices for what is essentially the same technology, gas-fired combined cycle generation. The price range seems greater than what could be explained by transmission cost differences between high and low cost regions. For the smaller sample of coal-fired projects, price variation is substantially less. Further data collection and analysis should be able to help isolate more clearly what market or cost factors are responsible for the observed variation.

On the correlation of electricity spot market prices and photovoltaic electricity generation

International Nuclear Information System (INIS)

Meyer, Tim; Luther, Joachim

2004-01-01

Discussions about market introduction of grid connected photovoltaics (PV) and its costs usually concentrate only on the gross energy produced without taking the time dependency of electricity prices and, thus, the time dependency of the value of PV electricity into account. To make a first approximation of what the effect of the time variance of electricity cost on the value of PV electricity is, the correlation with spot market prices is analysed in this paper. PV is not dispatchable by nature, but is relatively well predictable in the range of one day, if the average of spatially dispersed systems is considered. Thus, this correlation gives a good indication for the additional value of PV electricity

On the correlation of electricity spot market prices and photovoltaic electricity generation

International Nuclear Information System (INIS)

Meyer, T.; Luther, J.

2004-01-01

Discussions about market introduction of grid connected photovoltaics (PV) and its costs usually concentrate only on the gross energy produced without taking the time dependency of electricity prices and, thus, the time dependency of the value of PV electricity into account. To make a first approximation of what the effect of the time variance of electricity cost on the value of PV electricity is, the correlation with spot market prices is analysed in this paper. PV is not dispatchable by nature, but is relatively well predictable in the range of one day, if the average of spatially dispersed systems is considered. Thus, this correlation gives a good indication for the additional value of PV electricity. (Author)

Optimal scheduling for electric heat booster under day-ahead electricity and heat pricing

DEFF Research Database (Denmark)

Cai, Hanmin; You, Shi; Bindner, Henrik W.

2017-01-01

Multi-energy system (MES) operation calls for active management of flexible resources across energy sectors to improve efficiency and meet challenging environmental targets. Electric heat booster, a solution for Domestic Hot Water (DHW) preparation under Low-Temperature-District-Heating (LTDH......) context, is identified as one of aforementioned flexible resources for electricity and heat sectors. This paper extends the concept of optimal load scheduling under day-ahead pricing from electricity sector only to both electricity and heat sectors. A case study constructing day-ahead energy prices...

Income and price elasticities of electricity demand: Aggregate and sector-wise analyses

International Nuclear Information System (INIS)

Jamil, Faisal; Ahmad, Eatzaz

2011-01-01

Cointegration and vector error correction modeling approaches are widely used in electricity demand analysis. The study rigorously examines the determinants of electricity demand at aggregate and sectoral levels in Pakistan. In the backdrop of severe electricity shortages, our empirical findings give support to the existence of a stable long-run relationship among the variables and indicate that electricity demand is elastic in the long run to both income and price at aggregate level. At sectoral level, long-run income and price elasticity estimates follow this pattern except in agricultural sector, where electricity demand is found elastic to output but inelastic to electricity price. On the contrary, the coefficients for income and price are rather small and mostly insignificant in the short run. We employed temperature index, price of diesel oil and capital stock at aggregate and sectoral levels as exogenous variables. These variables account for most of the variations in electricity demand in the short run. It shows that mechanization of the economy significantly affect the electricity demand at macro level. Moreover, elastic electricity demand with respect to electricity price in most of the sectors implies that electricity price as a policy tool can be used for efficient use and conservation. - Highlights: → The study conducts analysis for aggregate and four sectors. → Sectoral analyses are for residential, commercial, manufacturing and agricultural sectors. → We obtained higher positive income and negative price elasticity in the long run. → The higher price elasticity implies that price can be used as a policy tool. → Capital stock and temperature variables explain most of the short-run demand fluctuations.

The price of electric power in EU region decreased in 1998

International Nuclear Information System (INIS)

Kolttola, L.

2000-01-01

The price of both household and industrial electric power decreased in EU region during 1998. The price of industrial power decreased by more than 3% and that of households by 0.5%. According to the Eurostat the price of industrial power decreased most in Germany and in Lisbon in Portugal. In the statistics Germany has been divided into several sub-areas. In most of these areas the price decrease was more than 10%. The price of the electric power increased e.g. in London and Birmingham in UK. The price of the electric power consumed by households decreased significantly in Athens (Greece), in Finland and Portugal, and they increased most in the Netherlands and in Leipzig in Germany. The price of industrial electric power is cheapest in Sweden being only about 0.21 FIM (0.035) per kWh, and in Finland the price in the beginning of 1999 was 0.26 FIM (0.0431) per kWh. The price of industrial electric power was highest in Germany and Italy. VAT is not included in the prices used in the survey of industrial electric power. The power consumption of the plants used in the comparison is 2.0 million kWh, the maximum power 500 kW and the maximum operation time 4000 h/a. The price of electric power for households in Greece, there it is cheapest, was under 0.4 FIM (0.07) per kWh. The data of Greece is collected from Athens. In Finland the price of domestic power was second lowest, being less than 0.5 FIM/kWh. The prices in Italy and Denmark were highest in the EU region. The households selected to the survey use 3500 kWh of power annually, 1300 kWh of which is consumed in the night. All the taxes, also VAT, have been included in the price. In 1998 half of the power (52%) was generated by traditional thermal power. The share of nuclear power was 34% and that of hydroelectric power and others 14%. The others group include also the wind power. In 1998 the consumption of thermal power increased by 5%, as well as the consumption of hydroelectric power and other, while the generation

Forecasting day ahead electricity spot prices: The impact of the EXAA to other European electricity markets

OpenAIRE

Ziel, Florian; Steinert, Rick; Husmann, Sven

2015-01-01

In our paper we analyze the relationship between the day-ahead electricity price of the Energy Exchange Austria (EXAA) and other day-ahead electricity prices in Europe. We focus on markets, which settle their prices after the EXAA, which enables traders to include the EXAA price into their calculations. For each market we employ econometric models to incorporate the EXAA price and compare them with their counterparts without the price of the Austrian exchange. By employing a forecasting study...

Ontario electricity outlook : smaller reserve margins and higher prices

International Nuclear Information System (INIS)

Alexander, C.; Kalevar, P.

2002-01-01

Privatization of Hydro One has been delayed, but this will not postpone the scheduled launch of restructuring the electricity markets in Ontario on May 1, 2002. The main concern of Ontario consumers is whether they will undergo an energy crisis such as the one experienced in California. A report released in February 2002 stated that electricity bills will be higher under the new electricity regime. It appears that electricity supply reserve margins will be tighter than originally thought, raising price volatility in the summer and fall. The authors claim that the chance for an energy crisis are low because of the added generating capacity. However, regardless of whether consumers sign a fixed term price contract with retailers, it is likely that electricity bills will be higher in 2002 and 2003. The Independent Electricity Market Operator (IMO) is assuring the public that the power generation resources currently available are sufficient to meet expected demand. However, in June through July, it is possible that reserves will fall short. It is also evident that charges for distribution, transmission and other services will be higher under the restructured system. Electricity bills are likely to be about 5 to 15 per cent higher in 2003 than they were before March 1, 2002. Higher prices might not last indefinitely. Initially, they will be used to pay off the debt, but competition and opportunities for profit should allow for greater efficiencies and innovation in Ontario's electricity system and prices could potentially fall lower than pre-deregulation prices. 1 tab., 3 figs

CO2 price dynamics. The implications of EU emissions trading for electricity prices and operations

International Nuclear Information System (INIS)

Sijm, J.P.M.; Bakker, S.J.A.; Harmsen, H.W.; Lise, W.; Chen, Y.

2006-07-01

The experience with CO 2 trading and allowances prices in the last year is reviewed, with a focus on the factors influencing the price of electricity in EU countries. A statistical analysis investigates the relationship between the large increases in electricity prices experienced in 2005 and their relationship to CO 2 prices. In addition, a market simulation analysis using the COMPETES model is performed to assess the extent to which profit-maximizing generators, some of which possess market power, might pass on the opportunity cost of allowances to consumers. The paper concludes by reviewing possible options for policy makers to address the possible adverse implications of price increases caused by CO/sub 2/ trading.

Investigation by CRE into record high electricity prices on Powernext Day-ahead Auction in October and November 2007. Analysis report

International Nuclear Information System (INIS)

2008-01-01

In October and November 2007, electricity prices hit record highs on the Powernext Day-Ahead Auction trading platform. While, during the first nine months of the year, prices for delivery between 6 pm and 8 pm averaged euros 36 /MWh, rising to a maximum of euros 118 /MWh, they spiked at: - euros 1,236 /MWh for delivery on Monday, 29 October 2007 between 6 pm and 7 pm; - euros 2,500 /MWh for delivery on Monday, 12 November 2007 between 8 pm and 9 pm; - euros 1,762 /MWh for delivery on Thursday, 15 November 2007 between 6 pm and 7 pm. Day ahead prices of electricity have a major effect on the procurement costs of suppliers, and consequently on the formation of selling prices to end consumers. Article 28 of French Act No.2000-108 of 10 February 2000 stipulates that CRE 'shall monitor, for electricity and natural gas, all transactions made between suppliers, brokers and producers, all transactions made on the organised markets and cross-border trading. It shall ensure that bids made by suppliers, brokers and producers are consistent with their financial and technical requirements'. Article 33 of the same Act specifies that, 'In performing the tasks entrusted to it, the French Energy Regulatory Commission (CRE) may gather any information it requires from the Ministers for the Economy and for Energy, from public electricity transmission and distribution system operators, from operators of infrastructures for the natural gas transmission and distribution networks and operators of liquefied natural gas facilities, as well as from any other company involved in the electricity and natural gas market. It may also call upon any person whose evidence it deems necessary for the purposes of its investigations'. In this context, and in application of its duty to monitor the electricity wholesale markets, CRE has undertaken an investigation to analyse the mechanisms underlying the formation of such high prices. To this end, CRE gathered information relative to decisions taken by

The crucial relationship among energy commodity prices: Evidence from the Spanish electricity market

International Nuclear Information System (INIS)

Moutinho, Victor; Vieira, Joel; Carrizo Moreira, Antonio

2011-01-01

The main purpose of this article is twofold to analyze: (a) the long-term relation among the commodities prices and between spot electricity market price and commodity prices, and (b) the short-term dynamics among commodity prices and between electricity prices and commodity prices. Data between 2002 and 2005 from the Spanish electricity market was used. Econometric methods were used in the analysis of the commodity spot price, namely the vector autoregression model, the vector error correction model and the granger causality test. The co-integration approach was used to analyze the long-term relationship between the common stochastic trends of four fossil fuel prices. One of the findings in the long-term relation is that the prices of fuel and the prices of Brent are intertwined, though the prices of Brent ten to 'move' to reestablish the price equilibrium. Another finding is that the price of electricity is explained by the evolution of the natural gas series. - Highlights: → We model energy commodity prices in the Spanish electricity market. → We examine the short and long-term relationships among commodities prices. → We examine short and long-term relationships using co-integration techniques. → We found that in the long run the prices of fuel and Brent are intertwined. → The evolution of price of electricity is explained by the evolution of price of gas.

Consumption, price asymmetries, transmission congestion and market power in the Norwegian electricity market

Energy Technology Data Exchange (ETDEWEB)

Mirza, Faisal Mehmood

2011-07-01

The results from this dissertation add to the ongoing debate in Norway if NordPool spot should shift from zonal price scheme to the nodal price scheme. Academically, the individual papers provide a number of theoretical frameworks that are helpful in analyzing electricity markets around the world. The PhD dissertation investigates price determination process in the Norwegian electricity market and evaluates if the market works at perfectly competitive level or producers exercise market power to drive prices away from their marginal cost of production. Using aggregate hourly electricity supply and demand data, the empirical analysis carried out in this dissertation leads to the following conclusions. 1. Market power at the generation level is not a major problem for the Norwegian electricity market. On average, when we consider the events of binding transmission capacity as exogenous, the average markup in economic terms is small and has not exceeded one percent. 2. Producers can use the information on available transmission capacity between different price areas in Norway and restrict their output to induce transmission congestion in their price area to exercise market power. Average markup during such instances has remained high at 20 percent. 3. Transmission capacity in Norway is not being optimally utilized as import capacity remains at its lowest level during the hours when southern Norway is generally a net importer of electricity, when compared to the rest of the hours of the day. 4. A segment of electricity retailers in the Norwegian electricity market exercises its market power by controlling the pass-through of price changes in the wholesale market to the retail market for variable price contract consumers. The pass-through is asymmetric, whereby cost increase is transmitted completely and quickly when compared to the case of cost decrease. 5.The Daylight saving time (Summer time) policy is helpful in ensuring energy efficiency. It results in electricity

The real-time price elasticity of electricity

NARCIS (Netherlands)

Lijesen, M.G.

2007-01-01

The real-time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices. Despite the importance, empirical estimates of the real-time elasticity are hardly available. This paper provides a quantification of the real-time

Pricing Electric Power in the Czech Republic and in Selected Countries

Directory of Open Access Journals (Sweden)

Eva Mazegue Pavelková

2016-01-01

Full Text Available This paper focuses on state intervention in the pricing of electricity from renewable power sources in the Czech Republic when compared with the pricing in the Slovak Republic, Germany, France and Italy. In these countries the state intervention is implemented in different forms, but the critical part of the price is regulated everywhere by the state. The price of electricity is determined by its production costs, which depend on the source from which electricity is produced. The highest cost of electricity is required to generate renewable energy, particularly solar power, while the lowest costs of power are associated with its production by coal-fired and natural gas-fired thermal power plants. However, hydroelectric power plants attain clearly the lowest cost for generating electricity. State intervention includes supporting power generation from renewable power sources by guaranteeing purchase prices.

A combined modeling approach for wind power feed-in and electricity spot prices

International Nuclear Information System (INIS)

Keles, Dogan; Genoese, Massimo; Möst, Dominik; Ortlieb, Sebastian; Fichtner, Wolf

2013-01-01

Wind power generation and its impacts on electricity prices has strongly increased in the EU. Therefore, appropriate mark-to-market evaluation of new investments in wind power and energy storage plants should consider the fluctuant generation of wind power and uncertain electricity prices, which are affected by wind power feed-in (WPF). To gain the input data for WPF and electricity prices, simulation models, such as econometric models, can serve as a data basis. This paper describes a combined modeling approach for the simulation of WPF series and electricity prices considering the impacts of WPF on prices based on an autoregressive approach. Thereby WPF series are firstly simulated for each hour of the year and integrated in the electricity price model to generate an hourly resolved price series for a year. The model results demonstrate that the WPF model delivers satisfying WPF series and that the extended electricity price model considering WPF leads to a significant improvement of the electricity price simulation compared to a model version without WPF effects. As the simulated series of WPF and electricity prices also contain the correlation between both series, market evaluation of wind power technologies can be accurately done based on these series. - Highlights: • Wind power feed-in can be directly simulated with stochastic processes. • Non-linear relationship between wind power feed-in and electricity prices. • Price reduction effect of wind power feed-in depends on the actual load. • Considering wind power feed-in effects improves the electricity price simulation. • Combined modeling of both parameters delivers a data basis for evaluation tools

An impact assessment of electricity and emission allowances pricing in optimised expansion planning of power sector portfolios

International Nuclear Information System (INIS)

Tolis, Athanasios I.; Rentizelas, Athanasios A.

2011-01-01

Highlights: → The impact of electricity and CO 2 allowance pricing in power sector is researched. → A stochastic programming approach without recourse is used for the optimisation. → Higher electricity prices may be proportionally beneficial for the power system. → The CO 2 allowance prices may be inversely proportionate with the expected yields. → High CO 2 allowance prices are inhibitors for conventional technology projects. -- Abstract: The present work concerns a systematic investigation of power sector portfolios through discrete scenarios of electricity and CO 2 allowance prices. The analysis is performed for different prices, from regulated to completely deregulated markets, thus representing different electricity market policies. The modelling approach is based on a stochastic programming algorithm without recourse, used for the optimisation of power sector economics under multiple uncertainties. A sequential quadratic programming routine is applied for the entire investigation period whilst the time-dependent objective function is subject to various social and production constraints, usually confronted in power sectors. The analysis indicated the optimal capacity additions that should be annually ordered from each competitive technology in order to substantially improve both the economy and the sustainability of the system. It is confirmed that higher electricity prices lead to higher financial yields of power production, irrespective of the CO 2 allowance price level. Moreover, by following the proposed licensing planning, a medium-term reduction of CO 2 emissions per MW h by 30% might be possible. Interestingly, the combination of electricity prices subsidisation with high CO 2 allowance prices may provide favourable conditions for investors willing to engage on renewable energy markets.

Gas and electricity price in the European Union in 2011

International Nuclear Information System (INIS)

Martin, Jean-Philippe

2012-11-01

This document indicates and comments the evolution of gas and electricity prices in the different countries of the European Union. As far as natural gas is concerned, it outlines that taxes on gas are higher in Nordic countries, and that prices are increasing everywhere (for industry as well as for households). As far as electricity is concerned, price is rather cheap in France compared to the other countries. Graphs indicate the evolution of electricity prices between 2010 and 2011 in the different countries for industry and households. Even if a decrease has been noticed in some countries, the general trend is to an increase (between 5 and 10% in average)

Model documentation: Electricity market module, electricity finance and pricing submodule

Energy Technology Data Exchange (ETDEWEB)

1994-04-07

The purpose of this report is to define the objectives of the model, describe its basic approach, and provide detail on how it works. The EFP is a regulatory accounting model that projects electricity prices. The model first solves for revenue requirements by building up a rate base, calculating a return on rate base, and adding the allowed expenses. Average revenues (prices) are calculated based on assumptions regarding regulator lag and customer cost allocation methods. The model then solves for the internal cash flow and analyzes the need for external financing to meet necessary capital expenditures. Finally, the EFP builds up the financial statements. The EFP is used in conjunction with the National Energy Modeling System (NEMS). Inputs to the EFP include the forecast generating capacity expansion plans, operating costs, regulator environment, and financial data. The outputs include forecasts of income statements, balance sheets, revenue requirements, and electricity prices.

Econometric analysis of Australian emissions markets and electricity prices

International Nuclear Information System (INIS)

Cotton, Deborah; De Mello, Lurion

2014-01-01

Emissions trading schemes aim to reduce the emissions in certain pollutants using a market based scheme where participants can buy and sell permits for these emissions. This paper analyses the efficiency of the two largest schemes in Australia, the NSW Greenhouse Gas Abatement Scheme and the Mandatory Renewable Energy Trading Scheme, through their effect on the electricity prices from 2004 to 2010. We use a long run structural modelling technique for the first time on this market. It provides a practical long-run approach to structural relationships which enable the determination of the effectiveness of the theoretical expectations of these schemes. The generalised forecast error variance decomposition analysis finds that both schemes' emissions prices have little effect on electricity prices. Generalised impulse response function analysis support this finding indicating that when shocks are applied to electricity by the two schemes it returns to equilibrium very quickly. This indicates that these schemes are not having the effect anticipated in their legislation. - Highlights: • We analyse two emissions trading schemes in Australia. • We test for their effect on wholesale electricity prices. • The test uses generalised forecast error variance decomposition analysis. • The tests find long run relationship between the variables in both the samples. • The short run-dynamics indicate that they play a minimal role in electricity prices

The economic impact of carbon pricing with regulated electricity prices in China—An application of a computable general equilibrium approach

International Nuclear Information System (INIS)

Li, Ji Feng; Wang, Xin; Zhang, Ya Xiong; Kou, Qin

2014-01-01

We use a dynamic CGE model (SICGE) to assess the economic and climate impacts of emissions trading system (ETS) in China with a carbon price of 100 Yuan/ton CO2. A particular focus is given to the regulated electricity price regime, which is a major concern of electricity sector’s cost-effective participation in ETS in China. We found: (1) Carbon pricing is an effective policy for China to reduce CO 2 emissions. Total CO 2 emissions reduction ranges from 6.8% to 11.2% in short-term. (2) Rigid electricity price entails lower CO 2 emissions reduction but can be considered as a feasible starting point to introduce carbon pricing policies in short-term as long as governmental subsidies are given to electricity production. (3) In mid- and long-term, the efficient policy is to earmark carbon revenue with competitive electricity price. We propose to use carbon revenue to reduce consumption tax in the first year of the introduction of carbon price and to use the carbon revenue to reduce production tax in following years. - Highlights: • We use a CGE model to assess the impacts of carbon pricing in China. • We test different scenarios of carbon cost pass-through in electricity price. • Carbon pricing policy cost-efficiency is examined with double-dividend hypothesis

The plunge in German electricity futures prices – Analysis using a parsimonious fundamental model

International Nuclear Information System (INIS)

Kallabis, Thomas; Pape, Christian; Weber, Christoph

2016-01-01

The German market has seen a plunge in wholesale electricity prices from 2007 until 2014, with base futures prices dropping by more than 40%. This is frequently attributed to the unexpected high increase in renewable power generation. Using a parsimonious fundamental model, we determine the respective impact of supply and demand shocks on electricity futures prices. The used methodology is based on a piecewise linear approximation of the supply stack and time-varying price-inelastic demand. This parsimonious model is able to replicate electricity futures prices and discover non-linear dependencies in futures price formation. We show that emission prices have a higher impact on power prices than renewable penetration. Changes in renewables, demand and installed capacities turn out to be similarly important for explaining the decrease in operation margins of conventional power plants. We thus argue for the establishment of an independent authority to stabilize emission prices. - Highlights: •We build a parsimonious fundamental model based on a piecewise linear bid stack. •We use the model to investigate impact factors for the plunge in German futures prices. •Largest impact by CO_2 price developments followed by demand and renewable feed-in. •Power plant operating profits strongly affected by demand and renewables. •We argue that stabilizing CO_2 emission prices could provide better market signals.

EVT in electricity price modeling : extreme value theory not only on the extreme events

International Nuclear Information System (INIS)

Marossy, Z.

2007-01-01

The extreme value theory (EVT) is commonly used in electricity and financial risk modeling. In this study, EVT was used to model the distribution of electricity prices. The model was built on the price formation in electricity auction markets. This paper reviewed the 3 main modeling approaches used to describe the distribution of electricity prices. The first approach is based on a stochastic model of the electricity price time series and uses this stochastic model to generate the given distribution. The second approach involves electricity supply and demand factors that determine the price distribution. The third approach involves agent-based models which use simulation techniques to write down the price distribution. A fourth modeling approach was then proposed to describe the distribution of electricity prices. The new approach determines the distribution of electricity prices directly without knowing anything about the data generating process or market driving forces. Empirical data confirmed that the distribution of electricity prices have a generalized extreme value (GEV) distribution. 8 refs., 2 tabs., 5 figs

Estimating the price elasticity for demand for electricity by sector in South Africa

Directory of Open Access Journals (Sweden)

Roula Inglesi-Lotz

2011-12-01

Full Text Available This paper analyses electricity consumption patterns in South Africa in an attempt to understand and identify the roots of the current electricity crisis. This is done by investigating various economic sectors’ responses to price changes using panel data for the period 1993–2004. Positive and statistically significant price elasticities over this period were found for the transport (rail and commercial sectors while there are positive, but small and statistically insignificant responses to price changes in the agriculture and mining sectors. Only the industrial sector responded to changes in electricity prices according to theory, namely illustrating negative demand elasticities. This sector, however, dominates electricity consumption resulting in aggregate demand elasticities that are negative. These results explain, in part, the current electricity crisis. Given the historic low level of electricity prices in conjunction with, on the whole, a real price decline, i.e. price increases lower than the inflation rate; there was no major incentive to reduce electricity consumption and/or to be efficient. This result supports the notion that prices do have an important signalling effect in the economy. Hence, the electricity prices should be considered not only from an economic growth or social vantage point, but also from a supply and technocratic perspective, which includes environmental factors such as CO2-emissions. Prices should not be determined without considering the system-wide implications thereof.

Controlling Electricity Consumption by Forecasting its Response to Varying Prices

DEFF Research Database (Denmark)

Corradi, Olivier; Ochsenfeld, Henning Peter; Madsen, Henrik

2013-01-01

electricity consumption using a one-way price signal. Estimation of the price-response is based on data measurable at grid level, removing the need to install sensors and communication devices between each individual consumer and the price-generating entity. An application for price-responsive heating systems......In a real-time electricity pricing context where consumers are sensitive to varying prices, having the ability to anticipate their response to a price change is valuable. This paper proposes models for the dynamics of such price-response, and shows how these dynamics can be used to control...... is studied based on real data, before conducting a control by price experiment using a mixture of real and synthetic data. With the control objective of following a constant consumption reference, peak heating consumption is reduced by nearly 5%, and 11% of the mean daily heating consumption is shifted....

How electricity providers communicate price increases – A qualitative analysis of notification letters

International Nuclear Information System (INIS)

Pick, Doreén; Zielke, Stephan

2015-01-01

In several markets firms are required to explicitly announce price increases by sending customers notification letters. The purpose of this article is to analyze how electricity providers deal with such obligatory price increase communication and to provide a comprehensive overview of communicative arguments used by firms. Data is gathered through a content analysis of 97 price increase mailings. Findings show that electricity providers apply several price communication strategies while other promising strategies for customer retention are mostly ignored (i.e., those related to competitors, offerings and relationship benefits). Further, price increase communication differs between national and local firms. Local firms are more transparent in their price increase communication and refer even less often to offer and relationship benefits. Electricity firms have many options to improve the potential effects of price increase letters, such as referring to the future relationship. This is the first study which examines the content of price increase communication by firms. It structures price communication practices used by electricity providers, analyzes their empirical relevance, summarizes findings in five global propositions, and provides a detailed agenda for future research. Moreover, the study indicates several means for public policy organizations to offer regulations on the content of price increase notifications. - Highlights: • We examine 97 price increase letters from electricity providers in Germany. • We investigate the means how firms deal with price increase communications. • Electricity providers aim to hide price increases towards their customers. • Electricity providers only scarcely use benefit and relationship communication. • Price increase communication differs between types of providers as national firms are more professional.

Time-varying convergence in European electricity spot markets and their association with carbon and fuel prices

International Nuclear Information System (INIS)

Menezes, Lilian M. de; Houllier, Melanie A.; Tamvakis, Michael

2016-01-01

Long-run dynamics of electricity prices are expected to reflect fuel price developments, since fuels generally account for a large share in the cost of generation. As an integrated European market for electricity develops, wholesale electricity prices should be converging as a result of market coupling and increased interconnectivity. Electricity mixes are also changing, spurred by a drive to significantly increase the share of renewables. Consequently, the electricity wholesale price dynamics are evolving, and the fuel–electricity price nexus that has been described in the literature is likely to reflect this evolution. This study investigates associations between spot prices from the British, French and Nordpool markets with those in connected electricity markets and fuel input prices, from December 2005 to October 2013. In order to assess the time-varying dynamics of electricity spot price series, localized autocorrelation functions are used. Electricity spot prices in the three markets are found to have stationary and non-stationary periods. When a trend in spot prices is observed, it is likely to reflect the trend in fuel prices. Cointegration analysis is then used to assess co-movement between electricity spot prices and fuel inputs to generation. The results show that British electricity spot prices are associated with fuel prices and not with price developments in connected markets, while the opposite is observed in the French and Nordpool day-ahead markets. - Highlights: • Electricity market integration policies may have altered EU spot electricity prices. • LACF is used to assess the changing nature of electricity spot prices. • EU electricity spot prices show both stationary and non-stationary periods. • Carbon and fuel prices have greater impact on British spot prices. • In continental Europe, electricity prices have decoupled from fuel prices.

Using neural networks and extreme value distributions to model electricity pool prices: Evidence from the Australian National Electricity Market 1998–2013

International Nuclear Information System (INIS)

Dev, Priya; Martin, Michael A.

2014-01-01

Highlights: • Neural nets are unable to properly capture spiky price behavior found in the electricity market. • We modeled electricity price data from the Australian National Electricity Market over 15 years. • Neural nets need to be augmented with other modeling techniques to capture price spikes. • We fit a Generalized Pareto Distribution to price spikes using a peaks-over-thresholds approach. - Abstract: Competitors in the electricity supply industry desire accurate predictions of electricity spot prices to hedge against financial risks. Neural networks are commonly used for forecasting such prices, but certain features of spot price series, such as extreme price spikes, present critical challenges for such modeling. We investigate the predictive capacity of neural networks for electricity spot prices using Australian National Electricity Market data. Following neural net modeling of the data, we explore extreme price spikes through extreme value modeling, fitting a Generalized Pareto Distribution to price peaks over an estimated threshold. While neural nets capture the smoother aspects of spot price data, they are unable to capture local, volatile features that characterize electricity spot price data. Price spikes can be modeled successfully through extreme value modeling

Wind power bidding in electricity markets with high wind penetration

International Nuclear Information System (INIS)

Vilim, Michael; Botterud, Audun

2014-01-01

Highlights: • We analyze the pricing systems and wind power trading in electricity markets. • We propose a model that captures the relation between market prices and wind power. • A probabilistic bidding model can increase profits for wind power producers. • Profit maximizing bidding strategies carry risks for power system operators. • We conclude that modifications of current market designs may be needed. - Abstract: Objective: The optimal day-ahead bidding strategy is studied for a wind power producer operating in an electricity market with high wind penetration. Methods: A generalized electricity market is studied with minimal assumptions about the structure of the production, bidding, or consumption of electricity. Two electricity imbalance pricing schemes are investigated, the one price and the two price scheme. A stochastic market model is created to capture the price effects of wind power production and consumption. A bidding algorithm called SCOPES (Supply Curve One Price Estimation Strategy) is developed for the one price system. A bidding algorithm called MIMICS (Multivariate Interdependence Minimizing Imbalance Cost Strategy) is developed for the two price system. Results: Both bidding strategies are shown to have advantages over the assumed “default” bidding strategy, the point forecast. Conclusion: The success of these strategies even in the case of high deviation penalties in a one price system and the implicit deviation penalties of the two price system has substantial implications for power producers and system operators in electricity markets with a high level of wind penetration. Practice implications: From an electricity market design perspective, the results indicate that further penalties or regulations may be needed to reduce system imbalance

Space-time modeling of electricity spot prices

DEFF Research Database (Denmark)

Abate, Girum Dagnachew; Haldrup, Niels

In this paper we derive a space-time model for electricity spot prices. A general spatial Durbin model that incorporates the temporal as well as spatial lags of spot prices is presented. Joint modeling of space-time effects is necessarily important when prices and loads are determined in a network...... in the spot price dynamics. Estimation of the spatial Durbin model show that the spatial lag variable is as important as the temporal lag variable in describing the spot price dynamics. We use the partial derivatives impact approach to decompose the price impacts into direct and indirect effects and we show...... that price effects transmit to neighboring markets and decline with distance. In order to examine the evolution of the spatial correlation over time, a time varying parameters spot price spatial Durbin model is estimated using recursive estimation. It is found that the spatial correlation within the Nord...

Short-term electricity prices forecasting in a competitive market: A neural network approach

International Nuclear Information System (INIS)

Catalao, J.P.S.; Mariano, S.J.P.S.; Mendes, V.M.F.; Ferreira, L.A.F.M.

2007-01-01

This paper proposes a neural network approach for forecasting short-term electricity prices. Almost until the end of last century, electricity supply was considered a public service and any price forecasting which was undertaken tended to be over the longer term, concerning future fuel prices and technical improvements. Nowadays, short-term forecasts have become increasingly important since the rise of the competitive electricity markets. In this new competitive framework, short-term price forecasting is required by producers and consumers to derive their bidding strategies to the electricity market. Accurate forecasting tools are essential for producers to maximize their profits, avowing profit losses over the misjudgement of future price movements, and for consumers to maximize their utilities. A three-layered feedforward neural network, trained by the Levenberg-Marquardt algorithm, is used for forecasting next-week electricity prices. We evaluate the accuracy of the price forecasting attained with the proposed neural network approach, reporting the results from the electricity markets of mainland Spain and California. (author)

Carbon price signal. Impact Analysis on the European Electricity System

International Nuclear Information System (INIS)

2016-03-01

The Paris Agreement signed by 195 countries late in December 2015, after COP 21, created a new basis for efficient cooperation between countries in the fight against climate change. The technologies being rolled out by the electricity sector will have very different impacts on climate change and, for the time being, investments other than public aid for renewable energies are being guided primarily by prices. To shed more slight on the issue of greenhouse gas emissions, which is closely related to the challenges addressed at COP21, RTE initiated a study in 2015 based on the models used in its Generation Adequacy Report. ADEME wanted to contribute to this effort and offer its support. The present document outlines the approach taken to assessing the impact of the carbon price signal on emissions from the European electric power system, its production costs and its structural evolution over the medium term. This approach was discussed with members of the 'Network Outlook Committee' of the Transmission System Users' Committee which includes environmental NGOs as well as the main economic actors from the power sector. Key findings resulting from the analysis developed in this report include: Simulations conducted with the current generation fleet show that the carbon price would have to be close to euro 30/tonne at the European level to drive a significant reduction in emissions (about 100 million tonnes a year, or 15 %) from the European power sector. A higher price of about euro 100/tonne would help drive an emissions reduction of close to 30%. Over the medium and long terms, beyond an impact on the number of hours fossil fuel power plants would be run, having a high carbon price would send a signal encouraging investment in renewable energies and could incentivise the development of flexible and storage capacity. It would notably guarantee the profitability of gas-fired plants and renewable power development. The following assumptions are factored into the study

The effects of utility DSM programs on electricity costs and prices

Energy Technology Data Exchange (ETDEWEB)

Hirst, E.

1991-11-01

More and more US utilities are running more and larger demand-side management (DSM) programs. Assessing the cost-effectiveness of these programs raises difficult questions for utilities and their regulators. Should these programs aim to minimize the total cost of providing electric-energy services or should they minimize the price of electricity? This study offers quantitative estimates on the tradeoffs between total costs and electricity prices. This study uses a dynamic model to assess the effects of energy-efficiency programs on utility revenues, total resource costs, electricity prices, and electricity consumption for the period 1990 to 2010. These DSM programs are assessed under alternative scenarios. In these cases, fossil-fuel prices, load growth, the amount of excess capacity the utility has in 1990, planned retirements of power plants, the financial treatment of DSM programs, and the costs of energy- efficient programs vary. These analyses are conducted for three utilities: a ``base`` that is typical of US utilities; a ``surplus`` utility that has excess capacity, few planned retirements, and slow growth in fossil-fuel prices and incomes; and a ``deficit`` utility that has little excess capacity, many planned retirements, and rapid growth in fossil-fuel prices and incomes. 28 refs.

Electricity Prices, Large-Scale Renewable Integration, and Policy Implications

OpenAIRE

Kyritsis, Evangelos; Andersson, Jonas; Serletis, Apostolos

2016-01-01

This paper investigates the effects of intermittent solar and wind power generation on electricity price formation in Germany. We use daily data from 2010 to 2015, a period with profound modifications in the German electricity market, the most notable being the rapid integration of photovoltaic and wind power sources, as well as the phasing out of nuclear energy. In the context of a GARCH-in-Mean model, we show that both solar and wind power Granger cause electricity prices, that solar power ...

Electricity pricing and management systems

International Nuclear Information System (INIS)

Sawal, D.M.; Bajapai, Ashok

1997-01-01

The installed capacity of power generation in India is at present 80,000 MW. Out of the total 5.79 lakh inhabitated villages in the country, 4.79 villages have been electrified so far. Total number of consumers of electricity are about 95 million in the country. For such a large country with population of over 900 million and area of 32.873 lakh sq. kms., the role of electricity pricing and management system of the power sector is of paramount importance

Electric power prices, price control and competition on the European domestic electric power market. Stromtarife, Preisaufsicht und Wettbewerb im Europaeischen Binnenmarkt fuer Strom

Energy Technology Data Exchange (ETDEWEB)

Weigt, N

1993-01-01

If one speaks of electric power prices and price control in the year 1992, this subject has a different dimension than it did two or three years ago, when the new federal rate scale for electric power (ETO Elt) was drawn up and put into practice. Since the beginning of this year, a draft for guidelines which was drawn up by the EC Commission exists which, going on the assumption that the European domestic electric power market will set an example, does away with territorial protection and in the name of third party access (TPA) allows for electric power-line transit, thus introducing at least partial competition to the electric power market. We no longer think in terms of closed systems with clear-cut responsibilities in regard to power supply, which form the basis for the laws on electric power prices, the cartel laws, the practices of the electric power control board and the cartel authorities. Thus, using the new federal rate scale for electric power and its principles as formulated in Article 1 as a point of departure, developments will go in the direction of a competitive system in accordance with the ideas of the EC Commission and German free-enterprise theoreticians, as laid down for example by the deregulation commission. Thus developments will lead us away from the status quo in the direction of possible reforms, if not to say revolutionary structural changes and the consequnces which they will bring for price and cartel laws. (orig.)

Application of auctions as a pricing mechanism for the interchange of electric power

International Nuclear Information System (INIS)

Post, D.L.; Coppinger, S.S.; Sheble, G.B.

1995-01-01

The expected move to a market-based electric power industry will significantly change electric utility operations. These changes will fundamentally alter the pricing of electric power. How this pricing will be accomplished is a key issue. Traditionally, embedded cost based methods have been used. Recently, spot-pricing has received attention as a possible approach in a market-based electric power environment. Another market-based approach is the use of auctions. This paper will present the application of a sequential sealed-bid and sealed-offer auction to the pricing of electric power by using linear programming

Plant life extensions for German nuclear power plants? Controversial discussion on potential electricity price effects

International Nuclear Information System (INIS)

Matthes, Felix C.; Hermann, Hauke

2009-06-01

The discussions on electricity price effects in case of the plant life extension of German nuclear power plants covers the following topics: (1) Introduction and methodology. (2) Electricity generation in nuclear power plants and electricity price based on an empirical view: electricity generation in nuclear power plants and final consumption price for households and industry in the European Union; electricity generation in nuclear power plants and electricity wholesale price in case of low availability of nuclear power plants in Germany; comparison of electricity wholesale prices in Germany and France. (3) Model considerations in relation to electricity prices and nuclear phase-out. (4) Concluding considerations.

Evaluation of dynamic pass-through of carbon prices into electricity prices – a cointegrated VECM analysis

OpenAIRE

Freitas, Carlos J. Pereira; Silva, Patrícia Pereira da

2013-01-01

This paper addresses the impact of the CO2 opportunity cost on the wholesale electricity price in the context of the Iberian electricity market (MIBEL), namely on the Portuguese system, for the period corresponding to the Phase II of the European Union Emission Trading Scheme (EU ETS). In the econometric analysis a vector error correction model (VECM) is specified to estimate both long–run equilibrium relations and short–run interactions between the electricity price and the fuel (natural gas...

A Comparative Study on the Bidding Behavior of Pay as Bid and Uniform Price Electricity Market Players

DEFF Research Database (Denmark)

Haji Bashi, Mazaher; Khazraj, Hesam; Bak, Claus Leth

2018-01-01

High prices are expected for high demand times in the electricity markets and vice versa. The System Capacity Margin (SCM) demonstrates the abundance of electricity in the market. Naturally, higher SCM causes to lower price but, the players' behavior distortions have been frequently addressed...... in the literature. The overall producers’ bidding behaviors participating in Iran Electricity Market (IEM) as the low wind penetrated case and the Danish Electricity Market (DEM) as a high wind penetrated case are studied in this paper. An index is introduced to describe the overall market players’ behaviors....... Considering the players' behavior and using adaptive Neuro-fuzzy inference system, a model is derived. Although the total trend of prices is descending while the SCM increases, the results show some unexpected behaviors in IEM. Finally, players' biding behavior are compared in DEM and IEM. Markov transition...

Electricity structure and the impact on pricing, trade and the environment

International Nuclear Information System (INIS)

Pineau, P.O.

2007-01-01

The feasibility of integrating different electricity markets was discussed along with the benefits that can be derived. It was noted that some important differences in Canadian electricity markets create distortions that are harmful both economically and environmentally. Indirect subsidies provided to electricity consumers in British Columbia, Saskatchewan, Manitoba and Quebec result in inefficient consumption levels and in missed opportunities to reduce greenhouse gas (GHG) emissions. The structure of the Canadian electricity sector is characterized by public ownership and decentralization at the provincial level. The impact that this structure has on pricing policies, independent planning and environmental strategies was discussed. Alberta and Ontario have an hourly spot market fixing the market price for electricity, but all the other provinces use a pricing policy based on average cost, including a return on investment. This article also addressed the issue of electric generating units (EGUs) within each province and and their role in meeting provincial electricity demands. It was shown that electricity prices do not reflect the value of the resource across Canada. It was cautioned that subsidies create low electricity prices that result in inefficient consumption levels, thereby preventing clean hydropower to be exported to market-based provinces as a substitute to diesel, natural gas or coal-fuelled EGUs. An estimate of the indirect subsidies was presented in this article along with an analysis of possible consumption reduction scenarios if market prices were used. Carbon dioxide-equivalent emissions reductions that could be obtained if the saved energy was entirely exported were also estimated. Transmission issues involved in exporting electricity were also reviewed. It was argued that once strong financial incentives are in place to induce change, then economic and environmental gains will be proven. 9 tabs., 3 figs

A rough multi-factor model of electricity spot prices

International Nuclear Information System (INIS)

Bennedsen, Mikkel

2017-01-01

We introduce a new continuous-time mathematical model of electricity spot prices which accounts for the most important stylized facts of these time series: seasonality, spikes, stochastic volatility, and mean reversion. Empirical studies have found a possible fifth stylized fact, roughness, and our approach explicitly incorporates this into the model of the prices. Our setup generalizes the popular Ornstein–Uhlenbeck-based multi-factor framework of and allows us to perform statistical tests to distinguish between an Ornstein–Uhlenbeck-based model and a rough model. Further, through the multi-factor approach we account for seasonality and spikes before estimating – and making inference on – the degree of roughness. This is novel in the literature and we present simulation evidence showing that these precautions are crucial for accurate estimation. Lastly, we estimate our model on recent data from six European energy exchanges and find statistical evidence of roughness in five out of six markets. As an application of our model, we show how, in these five markets, a rough component improves short term forecasting of the prices. - Highlights: • Statistical modeling of electricity spot prices • Multi-factor decomposition • Roughness • Electricity price forecasting

The real-time price elasticity of electricity

International Nuclear Information System (INIS)

Lijesen, Mark G.

2007-01-01

The real-time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices. Despite the importance, empirical estimates of the real-time elasticity are hardly available. This paper provides a quantification of the real-time relationship between total peak demand and spot market prices. We find a low value for the real-time price elasticity, which may partly be explained from the fact that not all users observe the spot market price. If we correct for this phenomenon, we find the elasticity to be fairly low for consumers currently active in the spot market. If this conclusion applies to all users, this would imply a limited scope for government intervention in supply security issues. (Author)

The evolution of price elasticity of electricity demand in South Africa: A Kalman filter application

International Nuclear Information System (INIS)

Inglesi-Lotz, R.

2011-01-01

In South Africa, the electricity mismatch of supply and demand has been of major concern. Additional to past problems, the 2008 electricity crisis made the solution crucial after its damaging consequences to the economy. The disagreement on the need and consequences of the continuous electricity price hikes worsens the situation. To contribute to the recent electricity debate, this paper proposes a time-varying price elasticity of demand for electricity; the sensitivity of electricity consumption to price fluctuations changes throughout the years. The main purpose of this study is the estimation of the price elasticity of electricity in South Africa during the period 1980-2005 by employing an advanced econometric technique, the Kalman filter. Apart from the decreasing effect of electricity prices to consumption (-71.8% in the 1990s and -94.5% in the 2000s in average), our results conclude to an important finding: the higher the prices (for example in the 1980s) the higher the sensitivity of consumers to price fluctuations. Thus, further increases of the electricity prices may lead to changes in the behaviour of electricity consumers, focusing their efforts on improving their efficiency levels by introducing demand-side management techniques or even turning to other sources of - cheaper - energy. - Highlights: → The price elasticity of South Africa's electricity demand (1980-2005) is examined. → The Kalman filter methodology is used to show elasticity changes over time. → Decreasing effect of electricity prices to consumption over the years is found. → The higher the prices of electricity were, the higher the sensitivity of consumption. → If electricity prices increase, consumers will choose to consume more efficiently.

The evolution of price elasticity of electricity demand in South Africa: A Kalman filter application

Energy Technology Data Exchange (ETDEWEB)

Inglesi-Lotz, R., E-mail: roula.inglesi@up.ac.za [Department of Economics, EMS Building, University of Pretoria, Gauteng 0002 (South Africa)

2011-06-15

In South Africa, the electricity mismatch of supply and demand has been of major concern. Additional to past problems, the 2008 electricity crisis made the solution crucial after its damaging consequences to the economy. The disagreement on the need and consequences of the continuous electricity price hikes worsens the situation. To contribute to the recent electricity debate, this paper proposes a time-varying price elasticity of demand for electricity; the sensitivity of electricity consumption to price fluctuations changes throughout the years. The main purpose of this study is the estimation of the price elasticity of electricity in South Africa during the period 1980-2005 by employing an advanced econometric technique, the Kalman filter. Apart from the decreasing effect of electricity prices to consumption (-71.8% in the 1990s and -94.5% in the 2000s in average), our results conclude to an important finding: the higher the prices (for example in the 1980s) the higher the sensitivity of consumers to price fluctuations. Thus, further increases of the electricity prices may lead to changes in the behaviour of electricity consumers, focusing their efforts on improving their efficiency levels by introducing demand-side management techniques or even turning to other sources of - cheaper - energy. - Highlights: > The price elasticity of South Africa's electricity demand (1980-2005) is examined. > The Kalman filter methodology is used to show elasticity changes over time. > Decreasing effect of electricity prices to consumption over the years is found. > The higher the prices of electricity were, the higher the sensitivity of consumption. > If electricity prices increase, consumers will choose to consume more efficiently.

Parameter estimation of electricity spot models from futures prices

NARCIS (Netherlands)

Aihara, ShinIchi; Bagchi, Arunabha; Imreizeeq, E.S.N.; Walter, E.

We consider a slight perturbation of the Schwartz-Smith model for the electricity futures prices and the resulting modified spot model. Using the martingale property of the modified price under the risk neutral measure, we derive the arbitrage free model for the spot and futures prices. We estimate

Proceedings: 1996 EPRI conference on innovative approaches to electricity pricing: Managing the transition to market-based pricing

International Nuclear Information System (INIS)

1996-03-01

This report presents the proceedings from the EPRI conference on innovative approaches to electricity pricing. Topics discussed include: power transmission pricing; retail pricing; price risk management; new pricing paradigms; changes from cost-based to a market-based pricing scheme; ancillary services; retail market strategies; profitability; unbundling; and value added services. This is the leading abstract. Papers are processed separately for the databases

The effects of utility DSM programs on electricity costs and prices

Energy Technology Data Exchange (ETDEWEB)

Hirst, E.

1991-11-01

More and more US utilities are running more and larger demand-side management (DSM) programs. Assessing the cost-effectiveness of these programs raises difficult questions for utilities and their regulators. Should these programs aim to minimize the total cost of providing electric-energy services or should they minimize the price of electricity This study offers quantitative estimates on the tradeoffs between total costs and electricity prices. This study uses a dynamic model to assess the effects of energy-efficiency programs on utility revenues, total resource costs, electricity prices, and electricity consumption for the period 1990 to 2010. These DSM programs are assessed under alternative scenarios. In these cases, fossil-fuel prices, load growth, the amount of excess capacity the utility has in 1990, planned retirements of power plants, the financial treatment of DSM programs, and the costs of energy- efficient programs vary. These analyses are conducted for three utilities: a base'' that is typical of US utilities; a surplus'' utility that has excess capacity, few planned retirements, and slow growth in fossil-fuel prices and incomes; and a deficit'' utility that has little excess capacity, many planned retirements, and rapid growth in fossil-fuel prices and incomes. 28 refs.

Trends in prices to commercial energy consumers in the competitive Texas electricity market

International Nuclear Information System (INIS)

Zarnikau, Jay; Fox, Marilyn; Smolen, Paul

2007-01-01

To date, the price of electricity to commercial or business energy consumers has generally increased at greater rates in the areas of Texas where retail competition has been introduced than in areas that do not enjoy competition. Trends in commercial competitive prices have largely mirrored trends in residential prices. Market restructuring has tended to increase the sensitivity of retail electricity prices to changes in the price of natural gas, the marginal fuel used for generation in Texas. Consequently, the rapid increases in the commodity price of natural gas following restructuring led to increases in competitive electric rates which exceeded the increases in areas not exposed to restructuring, where the fuel component of electric rates tend to reflect a weighted average of the utilities' fuel costs. There is some evidence that pricing behavior by competitive retailers changed when the retailers affiliated with the incumbent utilities were permitted some pricing flexibility, resulting in a reduction in prices. (author)

Hourly Electricity Prices in Day-Ahead Markets

NARCIS (Netherlands)

R. Huisman (Ronald); C. Huurman; R.J. Mahieu (Ronald)

2007-01-01

textabstractThis paper focuses on the characteristics of hourly electricity prices in day-ahead markets. In these markets, quotes for day-ahead delivery of electricity are submitted simultaneously for all hours in the next day. The same information set is used for quoting all hours of the day. The

Electricity Futures Prices : Time Varying Sensitivity to Fundamentals

NARCIS (Netherlands)

S-E. Fleten (Stein-Erik); R. Huisman (Ronald); M. Kilic (Mehtap); H.P.G. Pennings (Enrico); S. Westgaard (Sjur)

2014-01-01

textabstractThis paper provides insight in the time-varying relation between electricity futures prices and fundamentals in the form of prices of contracts for fossil fuels. As supply curves are not constant and different producers have different marginal costs of production, we argue that the

Quantifying price risk of electricity retailer based on CAPM and RAROC methodology

International Nuclear Information System (INIS)

Karandikar, R.G.; Khaparde, S.A.; Kulkarni, S.V.

2007-01-01

In restructured electricity markets, electricity retailers set up contracts with generation companies (GENCOs) and with end users to meet their load requirements at agreed upon tariff. The retailers invest consumer payments as capital in the volatile competitive market. In this paper, a model for quantifying price risk of electricity retailer is proposed. An IEEE 30 Bus test system is used to demonstrate the model. The Capital Asset Pricing Model (CAPM) is demonstrated to determine the retail electricity price for the end users. The factor Risk Adjusted Recovery on Capital (RAROC) is used to quantify the price risk involved. The methodology proposed in this paper can be used by retailer while submitting proposal for electricity tariff to the regulatory authority. (author)

Quantifying price risk of electricity retailer based on CAPM and RAROC methodology

Energy Technology Data Exchange (ETDEWEB)

Karandikar, R.G.; Khaparde, S.A.; Kulkarni, S.V. [Electrical Engineering Department, Indian Institute of Technology Bombay, Mumbai 400 076 (India)

2007-12-15

In restructured electricity markets, electricity retailers set up contracts with generation companies (GENCOs) and with end users to meet their load requirements at agreed upon tariff. The retailers invest consumer payments as capital in the volatile competitive market. In this paper, a model for quantifying price risk of electricity retailer is proposed. An IEEE 30 Bus test system is used to demonstrate the model. The Capital Asset Pricing Model (CAPM) is demonstrated to determine the retail electricity price for the end users. The factor Risk Adjusted Recovery on Capital (RAROC) is used to quantify the price risk involved. The methodology proposed in this paper can be used by retailer while submitting proposal for electricity tariff to the regulatory authority. (author)

Economic analysis of price premiums in the presence of non-convexities. Evidence from German electricity markets

Energy Technology Data Exchange (ETDEWEB)

Paschmann, Martin

2017-11-15

Analyzing price data from sequential German electricity markets, namely the day-ahead and intraday auction, a puzzling but apparently systematic pattern of price premiums can be identified. The price premiums are highly correlated with the underlying demand profile. As there is evidence that widespread models for electricity forward premiums are not applicable to the market dynamics under analysis, a theoretical model is developed within this article which reveals that non-convexities in only a subset of sequential markets with differing product granularity may cause systematic price premiums at equilibrium. These price premiums may be bidirectional and reflect a value for additional short-term power supply system flexibility.

Economic analysis of price premiums in the presence of non-convexities. Evidence from German electricity markets

International Nuclear Information System (INIS)

Paschmann, Martin

2017-01-01

Analyzing price data from sequential German electricity markets, namely the day-ahead and intraday auction, a puzzling but apparently systematic pattern of price premiums can be identified. The price premiums are highly correlated with the underlying demand profile. As there is evidence that widespread models for electricity forward premiums are not applicable to the market dynamics under analysis, a theoretical model is developed within this article which reveals that non-convexities in only a subset of sequential markets with differing product granularity may cause systematic price premiums at equilibrium. These price premiums may be bidirectional and reflect a value for additional short-term power supply system flexibility.

The challenge for gas: get price-competitive with coal-fired electricity

International Nuclear Information System (INIS)

Gill, Len

1999-01-01

The challenge for the gas industry is to become price competitive with coal-fired electricity if it wants a larger share of the energy market. Returning to the issue of greater use of gas for electricity generation, the author points out that although electricity prices were rising they were still below the point where gas-fired electricity generation was viable. Copyright (1999) The Australian Gas Journal

Carbon price instead of support schemes: wind power investments by the electricity market

International Nuclear Information System (INIS)

Petitet, Marie; Finon, Dominique; Janssen, Tanguy

2014-10-01

In this paper we study the development of wind power by the electricity market without any usual support scheme which is aimed at subsidizing non mature renewables, with the sole incentive of a significant carbon price. Long term electricity market and investment decisions simulation by system dynamics modelling is used to trace the electricity generation mix evolution over a 20-year period in a pure thermal system. A range of stable carbon price, as a tax could be, is tested in order to determine the value above which wind power development by market forces becomes economically possible. Not only economic competitiveness in terms of cost price, but also profitability against traditional fossil fuel technologies are necessary for a market-driven development of wind power. Results stress that wind power is really profitable for investors only if the carbon price is very significantly higher than the price required for making wind power MWh's cost price competitive with CCGT and coal-fired plants on the simplistic basis of levelized costs. In this context, the market-driven development of wind power seems only possible if there is a strong commitment to climate policy, reflected by the preference for a stable and high carbon price rather than a fuzzy price of an emission trading scheme. Besides, results show that market-driven development of wind power would require a sky-rocketing carbon price if the initial technology mix includes a share of nuclear plants even with a moratorium on new nuclear development. (authors)

Poverty and environmental impacts of electricity price reforms in Montenegro

International Nuclear Information System (INIS)

Silva, Patricia; Klytchnikova, Irina; Radevic, Dragana

2009-01-01

The creation of the Energy Community of South Eastern Europe in 2005 committed countries in South Eastern Europe to liberalize their energy markets in accordance to EU regulations. The Government of Montenegro is thus in the process of reforming its energy sector, which includes an electricity tariff reform. This paper analyzes the environmental and social impacts of an increase in residential electricity tariffs contemplated - which is expected to range anywhere from 40 to over 100% increase. As this analysis shows, such a significant price rise will impose a heavy burden on the poor households and it may adversely affect the environment. In an ex ante investigation of the welfare impact of this price increase on households in Montenegro, we show that the anticipated price increase will result in a very significant increase in households' energy expenditures. A simulation of alternative policy measures analyzes the impact of different tariff levels and structures, focusing on the poor and vulnerable households. Higher electricity prices could also significantly increase the proportion of households using fuelwood for space heating. Thus the level of fuelwood consumption should be carefully monitored under the electricity tariff reforms and the Government of Montenegro should combine the tariff reforms with a carefully evaluated set of policy measures to mitigate the effect of the electricity price increase on the poor. (author)

Poverty and environmental impacts of electricity price reforms in Montenegro

Energy Technology Data Exchange (ETDEWEB)

Silva, Patricia [Department of Economics, University of Copenhagen, Studiestraede 6, DK-1455 Copenhagen K (Denmark); Klytchnikova, Irina [The World Bank, Poverty Reduction and Economic Management Department (ECSPE) (United States); Radevic, Dragana [Center for Entrepreneurship and Economic Development (ME)

2009-03-15

The creation of the Energy Community of South Eastern Europe in 2005 committed countries in South Eastern Europe to liberalize their energy markets in accordance to EU regulations. The Government of Montenegro is thus in the process of reforming its energy sector, which includes an electricity tariff reform. This paper analyzes the environmental and social impacts of an increase in residential electricity tariffs contemplated - which is expected to range anywhere from 40 to over 100% increase. As this analysis shows, such a significant price rise will impose a heavy burden on the poor households and it may adversely affect the environment. In an ex ante investigation of the welfare impact of this price increase on households in Montenegro, we show that the anticipated price increase will result in a very significant increase in households' energy expenditures. A simulation of alternative policy measures analyzes the impact of different tariff levels and structures, focusing on the poor and vulnerable households. Higher electricity prices could also significantly increase the proportion of households using fuelwood for space heating. Thus the level of fuelwood consumption should be carefully monitored under the electricity tariff reforms and the Government of Montenegro should combine the tariff reforms with a carefully evaluated set of policy measures to mitigate the effect of the electricity price increase on the poor. (author)

The role of price elastic demand in market power in the Nordic electricity markets

International Nuclear Information System (INIS)

Ravn, H.F.

2004-01-01

The paper discusses the modelling and analysis of market power and price elastic demand in the Nordic electricity spot market, Nordpool. The modelling of market power in the electricity sector must take into account a number of features that are specific to the electricity sector. First, electricity cannot be stored, but must be produced simultaneously with consumption. This aspect is, however, modified by the possibility of using hydro reservoirs as an indirect electricity storage. Second, the electricity transmission network plays an important role by breaking the market into several geographically separate sub-markets with different prices. Moreover, the specific bottlenecks may differ from hour to hour, according to the balance between supply and demand in each sub-market. Third, the demand side is presently characterised by very limited experience with hour to-hour-changes in electricity prices and very limited experience with short time adjustments of electricity consumption in response to changes in the electricity price. In the present paper three basic models for supply side competition on the Nordpool spot market will be presented, viz., perfect competition, Cournot competition and Supply Function Equilibrium. The models represent price and quantity settlement, including determination of price areas (bottle necks), in accordance with the way the Nordpool market functions. The models will incorporate electricity demand which is responsive to the electricity price. The paper describes the role of demand response for the determination of the electricity prices in each of the three supply side competition models. (au)

Energy prices in the EU: France is less expensive for electricity

International Nuclear Information System (INIS)

2009-12-01

This article proposes a comparison of electricity and gas prices among the European Union countries in 2008. It outlines that the price of electricity in France is among the cheapest, that taxes are higher in northern European countries as far as electricity is concerned, that the price of gas in France is in the average and that taxing in Europe is less for gas than for electricity. The existence of carbon taxes or climate-energy contributions in some countries is briefly presented (in Sweden since 1991, in Denmark since 1992, in Finland since 1994, in Slovenia since 1997 and in Great-Britain since 2001)

EU emission trading scheme and the effect on the price of electricity

International Nuclear Information System (INIS)

2004-01-01

The Electricity Market Working Group and the Climate Change Policy Working Group of the Nordic Council of Ministers, has commissioned ECON Analysis to prepare this report. The report analyses the demand and supply of GHG emission allowances and the price of emission allowances for the period 2005-2007 and 2008-2012 and the effect on the electricity price in the Nordic electricity market. The demand for emissions allowances has then been estimated for different scenarios, with different assumption on burden sharing between sectors and international participation and the supply of emission allowances is determined by the marginal abatement costs. Based on available information on abatement costs the supply of allowances is then estimated. The market balance between the demand and supply for allowances then determines the price of emission allowances. The effect on the electricity price is simulated with ECON's model for the Nordic power market to quantitatively estimate the effect from emissions trading on the electricity price, production, consumption, trade, etc. (BA)

A Regional Time-of-Use Electricity Price Based Optimal Charging Strategy for Electrical Vehicles

Directory of Open Access Journals (Sweden)

Jun Yang

2016-08-01

Full Text Available With the popularization of electric vehicles (EVs, the out-of-order charging behaviors of large numbers of EVs will bring new challenges to the safe and economic operation of power systems. This paper studies an optimal charging strategy for EVs. For that a typical urban zone is divided into four regions, a regional time-of-use (RTOU electricity price model is proposed to guide EVs when and where to charge considering spatial and temporal characteristics. In light of the elastic coefficient, the user response to the RTOU electricity price is analyzed, and also a bilayer optimization charging strategy including regional-layer and node-layer models is suggested to schedule the EVs. On the one hand, the regional layer model is designed to coordinate the EVs located in different time and space. On the other hand, the node layer model is built to schedule the EVs to charge in certain nodes. According to the simulations of an IEEE 33-bus distribution network, the performance of the proposed optimal charging strategy is verified. The results demonstrate that the proposed bilayer optimization strategy can effectively decrease the charging cost of users, mitigate the peak-valley load difference and the network loss. Besides, the RTOU electricity price shows better performance than the time-of-use (TOU electricity price.

A method for short term electricity spot price forecasting

International Nuclear Information System (INIS)

Koreneff, G.; Seppaelae, A.; Lehtonen, M.; Kekkonen, V.; Laitinen, E.; Haekli, J.; Antila, E.

1998-01-01

In Finland, the electricity market was de-regulated in November 1995. For the electricity purchase of power companies this has caused big changes, since the old tariff based contracts of bulk power supply have been replaced by negotiated bilateral short term contracts and by power purchase from the spot market. In the spot market, in turn, there are at the present two strong actors: The electricity exchange of Finland and the Nordic power pool which is run by the Swedish and Norwegian companies. Today, the power companies in Finland have short term trade with both of the electricity exchanges. The aim of this chapter is to present methods for spot price forecasting in the electricity exchange. The main focus is given to the Finnish circumstances. In the beginning of the presentation, the practices of the electricity exchange of Finland are described, and a brief presentation is given on the different contracts, or electricity products, available in the spot market. For comparison, the practices of the Nordic electricity exchange are also outlined. A time series technique for spot price forecasting is presented. The structure of the model is presented, and its validity is tested using real case data obtained from the Finnish power market. The spot price forecasting model is a part of a computer system for distribution energy management (DEM) in a de-regulated power market

A method for short term electricity spot price forecasting

Energy Technology Data Exchange (ETDEWEB)

Koreneff, G; Seppaelae, A; Lehtonen, M; Kekkonen, V [VTT Energy, Espoo (Finland); Laitinen, E; Haekli, J [Vaasa Univ. (Finland); Antila, E [ABB Transmit Oy (Finland)

1998-08-01

In Finland, the electricity market was de-regulated in November 1995. For the electricity purchase of power companies this has caused big changes, since the old tariff based contracts of bulk power supply have been replaced by negotiated bilateral short term contracts and by power purchase from the spot market. In the spot market, in turn, there are at the present two strong actors: The electricity exchange of Finland and the Nordic power pool which is run by the Swedish and Norwegian companies. Today, the power companies in Finland have short term trade with both of the electricity exchanges. The aim of this chapter is to present methods for spot price forecasting in the electricity exchange. The main focus is given to the Finnish circumstances. In the beginning of the presentation, the practices of the electricity exchange of Finland are described, and a brief presentation is given on the different contracts, or electricity products, available in the spot market. For comparison, the practices of the Nordic electricity exchange are also outlined. A time series technique for spot price forecasting is presented. The structure of the model is presented, and its validity is tested using real case data obtained from the Finnish power market. The spot price forecasting model is a part of a computer system for distribution energy management (DEM) in a de-regulated power market

Price formation in electricity forward markets and the relevance of systematic forecast errors

International Nuclear Information System (INIS)

Redl, Christian; Haas, Reinhard; Huber, Claus; Boehm, Bernhard

2009-01-01

Since the liberalisation of the European electricity sector, forward and futures contracts have gained significant interest of market participants due to risk management reasons. For pricing of these contracts an important fact concerns the non-storability of electricity. In this case, according to economic theory, forward prices are related to the expected spot prices which are built on fundamental market expectations. In the following article the crucial impact parameters of forward electricity prices and the relationship between forward and future spot prices will be assessed by an empirical analysis of electricity prices at the European Energy Exchange and the Nord Pool Power Exchange. In fact, price formation in the considered markets is influenced by historic spot market prices yielding a biased forecasting power of long-term contracts. Although market and risk assessment measures of market participants and supply and demand shocks can partly explain the futures-spot bias inefficiencies in the analysed forward markets cannot be ruled out. (author)

Pricing Electricity in Pools With Wind Producers

DEFF Research Database (Denmark)

Morales González, Juan Miguel; Conejo, A. J.; Kai Liu

2012-01-01

This paper considers an electricity pool that includes a significant number of wind producers and is cleared through a network-constrained auction, one day in advance and on an hourly basis. The hourly auction is formulated as a two-stage stochastic programming problem, where the first stage...... represents the clearing of the market and the second stage models the system operation under a number of plausible wind production realizations. This formulation co-optimizes energy and reserve, and allows deriving both pool energy prices and balancing energy prices. These prices result in both cost recovery...... for producers and revenue reconciliation. A case study of realistic size is used to illustrate the functioning of the proposed pricing scheme....

Seasonal variation of prices of sugar cane, ethanol and electric power

International Nuclear Information System (INIS)

Melo, Carmem Ozana de; Silva, Gerson Henrique da; Bueno, Osmar de Carvalho; Esperancini, Maura Seiko Tsutsui

2010-01-01

The aim of this study was to assess the seasonal price of sugar cane, fuel alcohol (hydrated and anhydrous) and electricity tariffs as a way of aiding tool for optimization of energy generation, using biomass originating from cane sugar. Using the method of moving average centered was concluded that cane and electricity rates were close to seasonal average, with low range of prices, suggesting the non-occurrence of seasonal variation in prices. Unlike the seasonal indices of ethanol showed seasonal variation of prices with greater amplitude of seasonal index. Thus, the results suggest that the utilization of by-products of sugar cane to produce electrical power points to the prospect of reducing risks associated with variations in the price of ethanol, thereby contributing to greater stability and possibility to those involved in planning alcohol sector. (author)

Stochastic factor model for electricity spot price-the case of the Nordic market

International Nuclear Information System (INIS)

Vehvilaeinen, Iivo; Pyykkoenen, Tuomas

2005-01-01

This paper presents a stochastic factor based approach to mid-term modeling of spot prices in deregulated electricity markets. The fundamentals affecting the spot price are modeled independently and a market equilibrium model combines them to form spot price. Main advantage of the model is the transparency of the generated prices because each underlying factor and the dynamics between factors can be modeled and studied in detail. Paper shows realistic numerical examples on the forerunner Scandinavian electricity market. The model is used to price an exotic electricity derivative

Stochastic factor model for electricity spot price - the case of the Nordic market

International Nuclear Information System (INIS)

Vehvilainen, I.; Pyykkoenen, T.

2005-01-01

This paper presents a stochastic factor based approach to mid-term modeling of spot prices in deregulated electricity markets. The fundamentals affecting the spot price are modeled independently and a market equilibrium model combines them to form spot price. Main advantage of the model is the transparency of the generated prices because each underlying factor and the dynamics between factors can be modeled and studied in detail. Paper shows realistic numerical examples on the forerunner Scandinavian electricity market. The model is used to price an exotic electricity derivative. (author)

Electricity transmission pricing. How contracts must reflect costs

International Nuclear Information System (INIS)

Shuttleworth, G.

1996-01-01

Two basic structures of transmission systems are distinguished: transmission channels offered through an integrated electric utility and open access offered over an independent network. The first structure allows the application of 'top-down pricing', where transmission prices are derived from customer tariffs less avoidable generation costs. Transmission prices in the second structure must be derived from a 'bottom-up' analysis of transmission costs, including building capacity, marginal losses, and congestion. 5 refs

Sensitivity of district heating system operation to heat demand reductions and electricity price variations: A Swedish example

International Nuclear Information System (INIS)

Åberg, M.; Widén, J.; Henning, D.

2012-01-01

In the future, district heating companies in Sweden must adapt to energy efficiency measures in buildings and variable fuel and electricity prices. Swedish district heating demands are expected to decrease by 1–2% per year and electricity price variations seem to be more unpredictable in the future. A cost-optimisation model of a Swedish local district heating system is constructed using the optimisation modelling tool MODEST. A scenario for heat demand changes due to increased energy efficiency in buildings, combined with the addition of new buildings, is studied along with a sensitivity analysis for electricity price variations. Despite fears that heat demand reductions will decrease co-generation of clean electricity and cause increased global emissions, the results show that anticipated heat demand changes do not increase the studied system's primary energy use or global CO 2 emissions. The results further indicate that the heat production plants and the fuels used within the system have crucial importance for the environmental impact of district heat use. Results also show that low seasonal variations in electricity price levels with relatively low winter prices promote the use of electric heat pumps. High winter prices on the other hand promote co-generation of heat and electricity in CHP plants. -- Highlights: ► A MODEST optimisation model of the Uppsala district heating system is built. ► The impact of heat demand change on heat and electricity production is examined. ► An electricity price level sensitivity analysis for district heating is performed. ► Heat demand changes do not increase the primary energy use or global CO 2 emissions. ► Low winter prices promote use of electric heat pumps for district heating production.

Combined natural gas and electricity network pricing

Energy Technology Data Exchange (ETDEWEB)

Morais, M.S.; Marangon Lima, J.W. [Universidade Federal de Itajuba, Rua Dr. Daniel de Carvalho, no. 296, Passa Quatro, Minas Gerais, CEP 37460-000 (Brazil)

2007-04-15

The introduction of competition to electricity generation and commercialization has been the main focus of many restructuring experiences around the world. The open access to the transmission network and a fair regulated tariff have been the keystones for the development of the electricity market. Parallel to the electricity industry, the natural gas business has great interaction with the electricity market in terms of fuel consumption and energy conversion. Given that the transmission and distribution monopolistic activities are very similar to the natural gas transportation through pipelines, economic regulation related to the natural gas network should be coherent with the transmission counterpart. This paper shows the application of the main wheeling charge methods, such as MW/gas-mile, invested related asset cost (IRAC) and Aumman-Shapley allocation, to both transmission and gas network. Stead-state equations are developed to adequate the various pricing methods. Some examples clarify the results, in terms of investments for thermal generation plants and end consumers, when combined pricing methods are used for transmission and gas networks. The paper also shows that the synergies between gas and electricity industry should be adequately considered, otherwise wrong economic signals are sent to the market players. (author)

The case for indexed price caps for U.S. electric utilities

International Nuclear Information System (INIS)

Lowry, M.N.

1991-01-01

Indexed price caps are a promising alternative to traditional, cost-of-service utility rate regulation. In just a decade, they have sprung from the drawing boards of economists to use by major utilities in a number of industries. Several authors have discussed the merits of indexed price caps for U.S. electric utilities. Despite their efforts, many parties to electric utility policy making are unfamiliar with the subject. This is unsurprising given the policy controversies that already embroil the industry. It is also unfortunate, since indexed price caps may help solve some of the problems that prompt these controversies. Indexed price caps can improve electric utility rate regulation in two ways. Utilities would have strong incentives to improve performance without the micromanagement that increasingly characterizes state-level regulation. Utilities could also be granted more extensive marketing freedoms, since indexes can protect customers from cross-subsidization. Two areas of concern about indexed price cap plans have emerged in recent discussions that the author has held with officials of electric utilities, intervenor groups, and regulatory agencies. Officials are often unclear on plan details, and therefore may not appreciate the degree of flexibility that is possible in plan design. Confusion over the available options in price cap adjustment indexes and the logic behind them is especially widespread. Officials also desire a clearer expression of how indexed price caps can coexist with current regulatory initiatives. This article details the major attributes of index plans, provides a brief history of indexing, discusses index design options in depth, and concludes with a vision of how indexed price caps can be made operational in today's electric utility industry

Markov switching of the electricity supply curve and power prices dynamics

Science.gov (United States)

Mari, Carlo; Cananà, Lucianna

2012-02-01

Regime-switching models seem to well capture the main features of power prices behavior in deregulated markets. In a recent paper, we have proposed an equilibrium methodology to derive electricity prices dynamics from the interplay between supply and demand in a stochastic environment. In particular, assuming that the supply function is described by a power law where the exponent is a two-state strictly positive Markov process, we derived a regime switching dynamics of power prices in which regime switches are induced by transitions between Markov states. In this paper, we provide a dynamical model to describe the random behavior of power prices where the only non-Brownian component of the motion is endogenously introduced by Markov transitions in the exponent of the electricity supply curve. In this context, the stochastic process driving the switching mechanism becomes observable, and we will show that the non-Brownian component of the dynamics induced by transitions from Markov states is responsible for jumps and spikes of very high magnitude. The empirical analysis performed on three Australian markets confirms that the proposed approach seems quite flexible and capable of incorporating the main features of power prices time-series, thus reproducing the first four moments of log-returns empirical distributions in a satisfactory way.

Price elasticity estimation of electricity demand in France

International Nuclear Information System (INIS)

Bourbonnais, Regis; Keppler, Jan Horst

2013-10-01

On request of the French Union of Electricity (UFE), the authors have carried out a series of econometric statistical tests in order to determine the price elasticity of electricity demand in France. The results obtained are all solid and realistic

Pricing of Fluctuations in Electricity Markets

OpenAIRE

Tsitsiklis, John N.; Xu, Yunjian

2012-01-01

In an electric power system, demand fluctuations may result in significant ancillary cost to suppliers. Furthermore, in the near future, deep penetration of volatile renewable electricity generation is expected to exacerbate the variability of demand on conventional thermal generating units. We address this issue by explicitly modeling the ancillary cost associated with demand variability. We argue that a time-varying price equal to the suppliers' instantaneous marginal cost may not achieve s...

Electricity-price arbitrage with plug-in hybrid electric vehicle: Gain or loss?

International Nuclear Information System (INIS)

Shang, Duo; Sun, Guodong

2016-01-01

Customers, utilities, and society can gain many benefits from distributed energy resources (DERs), including plug-in hybrid electric vehicles (PHEVs). Using battery on PHEV to arbitrage electricity price is one of the potential benefits to PHEV owners. There is, however, disagreement on the magnitude of such profit. This study uses a stochastic optimization model to estimate the potential profit from electricity price arbitrage of two types of PHEVs (PHEV-10, and PHEV-40) under three scenarios with variant electricity tariff and PHEV owners over a five-year period. The simulation results indicate that under current market structure, even with significant improvement in battery technologies (e.g., higher efficiency, lower cost), the PHEV owners can't achieve a positive arbitrage profit. This finding implies that expected arbitrage profit solely is not a viable option to engage PHEVs larger adoption. Subsidy and combining PHEV arbitraging with alternative PHEV services are required. - Highlights: •A stochastic optimization model is proposed to assess the arbitrage value of plug-in hybrid electric vehicle (PHEV). •Under current market condition, PHEV owners lose money from conducting PHEV arbitrage if counting battery degradation cost. •PHEV owner loses more money at real time pricing (RTP) than at time of use (TOU) scheme. •Battery improvement will reduce but can't even the arbitrage loss. •Expected arbitrage profit is not a viable option to engage PHEVs in dispatching and in providing ancillary services.

Electricity pricing and load dispatching in deregulated electricity market

International Nuclear Information System (INIS)

Geerli; Niioka, S.; Yokoyama, R.

2003-01-01

A rapid move to a market-based electric power industry will significantly alter the structure of electricity pricing and system operation. In this paper, we consider a game of negotiation in the electricity market, involving electric utilities, independent power producers (IPPs) and large-scale customers. We analyze the two-level game strategies for the negotiation process between utilities, IPPs and customers. These have been previously recognized as a way to come up with a rational decision for competitive markets, in which players intend to maximize their own profits. The derived operation rules based on competition can be viewed as an extension of the conventional equal incremental cost method for the deregulated power system. The proposed approach was applied to several systems to verify its effectiveness. (Author)

The impact of wind generation on the electricity spot-market price level and variance: The Texas experience

International Nuclear Information System (INIS)

Woo, C.K.; Horowitz, I.; Moore, J.; Pacheco, A.

2011-01-01

The literature on renewable energy suggests that an increase in intermittent wind generation would reduce the spot electricity market price by displacing high fuel-cost marginal generation. Taking advantage of a large file of Texas-based 15-min data, we show that while rising wind generation does indeed tend to reduce the level of spot prices, it is also likely to enlarge the spot-price variance. The key policy implication is that increasing use of price risk management should accompany expanded deployment of wind generation. - Highlights: → Rising wind generation in ERCOT tends to reduce electricity spot prices. → Rising wind generation in ERCOT is also likely to enlarge the spot-price variance. → Increased price risk management should accompany expanded wind power deployment.

Forecasting electricity spot-prices using linear univariate time-series models

International Nuclear Information System (INIS)

Cuaresma, Jesus Crespo; Hlouskova, Jaroslava; Kossmeier, Stephan; Obersteiner, Michael

2004-01-01

This paper studies the forecasting abilities of a battery of univariate models on hourly electricity spot prices, using data from the Leipzig Power Exchange. The specifications studied include autoregressive models, autoregressive-moving average models and unobserved component models. The results show that specifications, where each hour of the day is modelled separately present uniformly better forecasting properties than specifications for the whole time-series, and that the inclusion of simple probabilistic processes for the arrival of extreme price events can lead to improvements in the forecasting abilities of univariate models for electricity spot prices. (Author)

Impact of variable renewable production on electricity prices in Germany: a Markov switching model

International Nuclear Information System (INIS)

Martin de Lagarde, Cyril; Lantz, Frederic

2016-01-01

This paper aims at assessing the impact of renewable energy sources (RES) production on electricity spot prices. To do so, we use a two-regime Markov Switching (MS) model, that enables to disentangle the so-called 'merit-order effect' due to wind and solar photovoltaic productions (used in relative share of the electricity demand), depending on the price being high or low. We find that there are effectively two distinct price regimes that are put to light thanks to an inverse hyperbolic sine transformation that allows to treat negative prices. We also show that these two regimes coincide quite well with two regimes for the electricity demand (load). Indeed, when demand is low, prices are low and the merit-order effect is lower than when prices are high, which is consistent with the fact that the inverse supply curve is convex (i.e. has increasing slope). To illustrate this, we computed the mean marginal effects of RES production and load. On average, an increase of 1 GW of wind will decrease the price in regime 1 (resp. 2) by 0.77 euro /MWh (resp. 1 euro /MWh). The influence of solar is slightly weaker, as an extra gigawatt lowers the price of 0.73 euro /MWh in period 1, and 0.96 euro /MWh in regime 2. On the contrary, if the demand increases by 1 GW in regime 1 (resp. 2), the price increases on average by 0.93 euro /MWh (resp. 1.18 euro /MWh). Although we made sure these marginal effects are significantly different from one another, they are much more variable than the estimated coefficients of the model. Also, note that these marginal effects are only valid inside each regime when there is no switching. The latter regime partly corresponds to the high load regime, at the exception of periods during which RES production is high. The impact on volatility could also be observed: the variance of the (transformed) price is higher during the high-price regime than in the low-price one. In addition to the switching of the coefficients, we allowed the probabilities of

Biomass for electricity in the EU-27: Potential demand, CO2 abatements and breakeven prices for co-firing

International Nuclear Information System (INIS)

Bertrand, Vincent; Dequiedt, Benjamin; Le Cadre, Elodie

2014-01-01

This paper analyses the potential of biomass-based electricity in the EU-27 countries, and interactions with climate policy and the EU ETS. We estimate the potential biomass demand from the existing power plants, and we match our estimates with the potential biomass supply in Europe. Furthermore, we compute the CO2 abatement associated with the co-firing opportunities in European coal plants. We find that the biomass demand from the power sector may be very high compared with potential supply. We also identify that co-firing can produce high volumes of CO 2 abatements, which may be two times larger than that of the coal-to-gas fuel switching. We also compute biomass and CO2 breakeven prices for co-firing. Results indicate that biomass-based electricity remains profitable with high biomass prices, when the carbon price is high: a Euros 16–24 (25–35, respectively) biomass price (per MWh prim ) for a Euros 20 (50, respectively) carbon price. Hence, the carbon price appears as an important driver, which can make profitable a high share of the potential biomass demand from the power sector, even with high biomass prices. This aims to gain insights on how biomass market may be impacted by the EU ETS and others climate policies. - Highlights: • Technical potential of biomass (demand and CO 2 abatement) in European electricity. • Calculation for co-firing and biomass power plants; comparison with potential biomass supply in EU-27 countries. • Calculation of biomass and CO 2 breakeven prices for co-firing. • Potential demand is 8–148% of potential supply (up to 80% of demand from co-firing). • High potential abatement from co-firing (up to 365 Mt/yr); Profitable co-firing with €16-24 (25–35) biomass price for €20 (50) CO 2 price

Markets in real electric networks require reactive prices

International Nuclear Information System (INIS)

Hogan, W.W.

1996-01-01

Extending earlier seminal work, the author finds that locational spot price differences in an electric network provide the natural measure of the appropriate internodal transport charge. However, the problem of loop flow requires different economic intuition for interpreting the implications of spot pricing. The Direct Current model, which is the usual approximation for estimating spot prices, ignores reactive power effects; this approximation is best when thermal constraints create network congestion. However, when voltage constraints are problematic, the DC Load model is insufficient; a full AC Model is required to determine both real and reactive spot prices. 16 figs., 3 tabs., 22 refs

The relationship between electricity consumption, electricity prices and GDP in Pakistan

International Nuclear Information System (INIS)

Jamil, Faisal; Ahmad, Eatzaz

2010-01-01

This study analyzes the relationship among electricity consumption, its price and real GDP at the aggregate and sectoral level in Pakistan. Using annual data for the period 1960-2008, the study finds the presence of unidirectional causality from real economic activity to electricity consumption. In particular, growth in output in commercial, manufacturing and agricultural sectors tend to increase electricity consumption, while in residential sector, growth in private expenditures is the cause of rising electricity consumption. The study concludes that electricity production and management needs to be better integrated with overall economic planning exercises. This is essential to avoid electricity shortfalls and unplanned load shedding.

Wind energy and electricity prices. Exploring the 'merit order effect'

International Nuclear Information System (INIS)

Morthost, P.E.; Ray, S.; Munksgaard, J.; Sinner, A.F.

2010-04-01

This report focuses on the effect of wind energy on the electricity price in the power market. As the report will discuss, adding wind into the power mix has a significant influence on the resulting price of electricity, the so called merit order effect (MOE). The merit order effect has been quantified and discussed in many scientific publications. This report ends the first phase of a study on the MOE, evaluating the impact of EWEA's 2020 scenarios on future European electricity prices. The basic principles of the merit order effect are provided in the first part of the document. The literature review itself contains methods and tools not only to quantify the merit order effect but also in order to forecast its future range and volume.

Price sensitive electric power consumption in households. Final report; Prisfoelsomt elforbrug i husholdninger. Slutrapport

Energy Technology Data Exchange (ETDEWEB)

Togeby, M.; Hay, C. (Ea Energianalyse A/S, Copenhagen (Denmark))

2009-08-15

To gain experience with electric power consumption in households based on demand response a demonstration project was carried out for households with electric heating. More than 500 households with high power consumption (over 15,000 kWh / yr) participated. Participating households were divided into four groups: 1) a group with automation equipment ('Devi') installed, which automatically controls the electric heating in relation to electricity price signals based on pre-defined standards, 2) a group with electronics equipment ('Electronic House Keeper') installed which can show price signals so that the participant himself can control the electric heating in relation thereto, 3) a group who daily received an e-mail or a text message indicating the fluctuations in electricity prices, so that the participant can control the electric heating in relation to the received information, 4) a control group who did not have knowledge of or participated in the experiment. The main results of the project are that consumption must be controlled through automation. A real impact of the experiment can only be seen for the Devi group, which had automation equipment installed, and not for the email / text message group who had to manually respond to price signals. There must be opportunities for higher degree of differentiation. The automatics should be coupled to multiple thermostats, and the control should be detailed, for example, with control based on the individual thermostat in each room. The thermal comfort is essential. The participants want to manage and move their electricity consumption directly via 'Electronic House Keeper'. They would welcome the opportunity to have all household appliances connected to the solution, making it possible to turn on / off these depending on prices. Good information and communication are crucial to participants' motivation. (ln)

Electricity market price spike analysis by a hybrid data model and feature selection technique

International Nuclear Information System (INIS)

Amjady, Nima; Keynia, Farshid

2010-01-01

In a competitive electricity market, energy price forecasting is an important activity for both suppliers and consumers. For this reason, many techniques have been proposed to predict electricity market prices in the recent years. However, electricity price is a complex volatile signal owning many spikes. Most of electricity price forecast techniques focus on the normal price prediction, while price spike forecast is a different and more complex prediction process. Price spike forecasting has two main aspects: prediction of price spike occurrence and value. In this paper, a novel technique for price spike occurrence prediction is presented composed of a new hybrid data model, a novel feature selection technique and an efficient forecast engine. The hybrid data model includes both wavelet and time domain variables as well as calendar indicators, comprising a large candidate input set. The set is refined by the proposed feature selection technique evaluating both relevancy and redundancy of the candidate inputs. The forecast engine is a probabilistic neural network, which are fed by the selected candidate inputs of the feature selection technique and predict price spike occurrence. The efficiency of the whole proposed method for price spike occurrence forecasting is evaluated by means of real data from the Queensland and PJM electricity markets. (author)

On the electrification of road transport - Learning rates and price forecasts for hybrid-electric and battery-electric vehicles

International Nuclear Information System (INIS)

Weiss, Martin; Patel, Martin K.; Junginger, Martin; Perujo, Adolfo; Bonnel, Pierre; Grootveld, Geert van

2012-01-01

Hybrid-electric vehicles (HEVs) and battery-electric vehicles (BEVs) are currently more expensive than conventional passenger cars but may become cheaper due to technological learning. Here, we obtain insight into the prospects of future price decline by establishing ex-post learning rates for HEVs and ex-ante price forecasts for HEVs and BEVs. Since 1997, HEVs have shown a robust decline in their price and price differential at learning rates of 7±2% and 23±5%, respectively. By 2010, HEVs were only 31±22 € 2010 kW −1 more expensive than conventional cars. Mass-produced BEVs are currently introduced into the market at prices of 479±171 € 2010 kW −1 , which is 285±213 € 2010 kW −1 and 316±209 € 2010 kW −1 more expensive than HEVs and conventional cars. Our forecast suggests that price breakeven with these vehicles may only be achieved by 2026 and 2032, when 50 and 80 million BEVs, respectively, would have been produced worldwide. We estimate that BEVs may require until then global learning investments of 100–150 billion € which is less than the global subsidies for fossil fuel consumption paid in 2009. These findings suggest that HEVs, including plug-in HEVs, could become the dominant vehicle technology in the next two decades, while BEVs may require long-term policy support. - Highlights: ► Learning rates for hybrid-electric and battery-electric vehicles. ► Prices and price differentials of hybrid-electric vehicles show a robust decline. ► Battery-electric vehicles may require policy support for decades.

On the electricity shortage, price and electricity theft nexus

International Nuclear Information System (INIS)

Jamil, Faisal

2013-01-01

Pakistan is facing severe electricity shortfall of its history since 2006. Several measures have been implemented in order to mitigate electricity shortage. The focus has been on raising the installed capacity of electricity generation and transmission. The present policy results in expensive thermal electricity generation mostly using expensive and environmentally hazardous furnace oil and inability of utilities to recover their cost of supply although there is unprecedented rise in electricity tariffs. This study concentrates on the electricity demand and traces the relationship between electricity shortfalls, tariff rate and electricity theft in the background of recent electricity crisis using the data for the period 1985–2010. We employed the Granger causality test through error correction model and out-of-sample causality through variance decomposition method. Empirical evidence shows that electricity theft greatly influences electricity shortfalls through lowering investment and inefficient use of electricity. The study concludes that electricity crisis cannot be handled without combating rampant electricity theft in the country. - Highlights: ► The study investigates relationship among electricity outages, price and electricity theft. ► It employed Johansen approach, ECM and variance decomposition analysis. ► Empirical evidence shows that electricity theft causes outages and rising tariff rates. ► Variance decomposition analysis results are slightly different from ECM

Wealth Transfers from Implementing Real-Time Retail Electricity Pricing

OpenAIRE

Borenstein, Severin

2005-01-01

Adoption of real-time electricity pricing %u2014 retail prices that vary hourly to reflect changing wholesale prices %u2014 removes existing cross-subsidies to those customers that consume disproportionately more when wholesale prices are highest. If their losses are substantial, these customers are likely to oppose RTP initiatives unless there is a supplemental program to offset their loss. Using data on a random sample of 636 industrial and commercial customers in southern California, I sho...

Blending of electricity pricing with time flavour - an analysis of net system benefit to an electric utility in India

International Nuclear Information System (INIS)

Bhardwaj, J.L.

1992-01-01

Demand-side Management is a powerful strategy for modifying electric energy consumption patterns for the mutual benefit of consumers, the supplier and the economy as a whole Time-of-use pricing of electricity suggest a policy where the price is time-differentiated so as to reduce contribution to the system-peak which determines the capacity and investments of a power-system. This paper describes a case-study of net system benefit to an electric utility in India by offering time-of-use tariff to high voltage (HV) industrial consumers. The study shows that there is a potential of shifting about 19% H.V. Industrial loads from peak to off-peak hours thereby benefitting both, the consumers and the utility. 1 fig., 2 tabs

Transmission pricing and stranded costs in the electric power industry

International Nuclear Information System (INIS)

Baumol, W.J.; Sidak, J.G.

1995-09-01

Stranded costs are those costs that electric utilities are currently permitted to recover through their rates but whose recovery may be impeded or prevented by the advent of competition in the industry. Estimates of these costs run from the tens to the hundreds of billions of dollars. Should regulators permit utilities to recover stranded costs while they take steps to promote competition in the electric power industry. William Baumol and J. Gregory Sidak argue that answer to that question should be yes.The authors show that a transmission price, the price for sending electricity over the transmission grid, can be determined in a manner that is compatible with economic efficiency and clearly neutral in its effects upon all competitors in electricity generation. A correctly constructed regime of transmission pricing may in fact achieve the efficiency and equity goals that justify the recovery of stranded costs

Production planning of combined heat and power plants with regards to electricity price spikes : A machine learning approach

OpenAIRE

Fransson, Nathalie

2017-01-01

District heating systems could help manage the expected increase of volatility on the Nordic electricity market by starting a combined heat and power production plant (CHP) instead of a heat only production plant when electricity prices are expected to be high. Fortum Värme is interested in adjusting the production planning of their district heating system more towards high electricity prices and in their system there is a peak load CHP unit that could be utilised for this purpose. The econom...

Are electricity prices affected by the US dollar to Euro exchange rate? The Spanish case

International Nuclear Information System (INIS)

Munoz, M. Pilar; Dickey, David A.

2009-01-01

The objective of this paper is to investigate the relationships between Spanish electricity spot prices and the US dollar/Euro (USD/Euro) exchange rate during the period 2005-2007, taking into account the study of the association between dollar and oil prices, in order to better understand the evolution of the former over time. The first finding in this study is that Spanish electricity spots prices, the USD/Euro exchange rate and oil prices are cointegrated; therefore there is a long-run equilibrium relationship between the three variables. Short-run relationships have been detected between oil prices and Spanish electricity prices and USD/Euro exchange rate in the sense that Spanish electricity prices and USD/Euro exchange rate are affected by oil prices in the short run. There is a transmission of volatility between USD/Euro exchange rate and oil prices to Spanish electricity prices; so although Spanish electricity prices are not affected in level by the movements of USD/Euro exchange rate, they are in volatility. In this kind of scenario the conclusions confirm that for countries so dependent on external causes as Spain, one possible solution for guarantying the energy security would be the promotion of the renewable energies. Therefore we cannot ignore the impact in the internal expenses of the cost of installation and generation of green energies so there must be a balance between the increase in renewables and the reasonable market price of the electricity. (author)

Price-structure of electricity and district-heating. A background study for energy conservation programme

International Nuclear Information System (INIS)

1994-01-01

The present report deals with the pricing and price-structure of electricity and district-heating with their effects on energy saving. It constitutes part of the groundwork for the new Government Energy Conservation Programme. The report describes principles for the pricing of electricity and district-heating in Finland, and gives some examples of tariffs in foreign countries, which are interesting from the point of view of energy saving. Different utilities apply quite similar pricing principles but there are big differences in price levels between the utilities. The difference in consumer prices can be almost 100 % in the case of electricity and over 150 % as concerns district-heating. The change in retail prices in the last ten years has not had a big general impact on the consumption of electricity or on energy saving. On the other hand, when the price increases of individual utilities are studied, the impact on energy saving at least in the short term can be seen. It seems that an increase of the fixed charges in relation to energy rates has been as a general trend after 1990. To promote energy saving the changing energy rates should be given special emphasis in determining electricity and district-heating tariffs. The opening of the electricity market means that the electricity suppliers face a new situation also when pricing their products. Customers and their expectations will play an increasingly role. (orig.)

The futures and forward price differential in the Nordic electricity market

Energy Technology Data Exchange (ETDEWEB)

Wimschulte, Jens [University of Regensburg (Germany)

2010-08-15

This note investigates price differentials between electricity forwards and portfolios of short-term futures with identical delivery periods at the Nordic Power Exchange (Nord Pool). Since both contracts are traded at the same exchange, there is no influence of, for example, different market microstructure and default risk when examining the effect of the marking-to-market of futures on the price differential. Although the prices of the futures portfolios are, on average, below the corresponding forward prices, these price differentials are, on average, not statistically significant and not economically significant when taking transaction costs into account. Given the characteristics of the electricity contracts under observation, this is consistent with the predictions of the model and indicates efficient pricing in the Nord Pool forward market in contrast to previous results. (author)

The futures and forward price differential in the Nordic electricity market

International Nuclear Information System (INIS)

Wimschulte, Jens

2010-01-01

This note investigates price differentials between electricity forwards and portfolios of short-term futures with identical delivery periods at the Nordic Power Exchange (Nord Pool). Since both contracts are traded at the same exchange, there is no influence of, for example, different market microstructure and default risk when examining the effect of the marking-to-market of futures on the price differential. Although the prices of the futures portfolios are, on average, below the corresponding forward prices, these price differentials are, on average, not statistically significant and not economically significant when taking transaction costs into account. Given the characteristics of the electricity contracts under observation, this is consistent with the predictions of the model and indicates efficient pricing in the Nord Pool forward market in contrast to previous results. (author)

The long-run equilibrium impact of intermittent renewables on wholesale electricity prices

OpenAIRE

Newbery, D.

2016-01-01

High levels of low variable cost intermittent renewables lower wholesale electricity prices, and the depression of these prices could legitimately be recovered from consumers, preferably through capacity payments. Given that renewables are frequently subsidized for their learning benefits and carbon reduction, this paper asks what part of these subsidies should be recovered from final consumers. In long-run equilibrium, renewables have no impact on the number of hours peaking capacity runs, a...

Riding the Electricity Market as an Energy Management Strategy: Savings from Real-Time Pricing

Energy Technology Data Exchange (ETDEWEB)

Chiles, Thomas [U.S. General Services Administration, Washington, D.C. (United States); Shutika, Kenneth [U.S. General Services Administration, Washington, D.C. (United States); Coleman, Philip [Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)

2018-03-13

Dynamic pricing of electricity, in which retail prices facing customers are responsive to changes in the underlying wholesale markets, represents a step towards economic efficiency in that customers get exposed to some or all of the costs facing wholesale market players. But what do customers who opt for this greater exposure – available in the roughly 15 “de-regulated” states, as well as, to some extent, from some regulated utilities – get in return for their risks? The U.S. General Services Administration (GSA) took a retrospective eight-year look at what the savings would have been had they let the loads for which they purchase electricity in the Washington, DC area buy electricity on the real-time pricing (RTP) market – the dynamic pricing option with the highest risk – as opposed to the strategy they chose in actuality, which was fixing flat prices with 3rd-party providers. We found that opting for RTP for the eight years of the study (2005 through 2012) would have resulted in 17% savings, or almost a quarter of a billion dollars, relative to GSA’s actual prices from the 3rd-party suppliers. This is particularly astonishing given that GSA appeared to have timed the market well during the study period, consistently beating the standard offer products provided by the distribution utilities. The issue of budgetary predictability poses an obstacle for customers (especially government ones) considering RTP and, to a lesser extent, other dynamic pricing options. Indeed, GSA would have lost money with RTP in two of the eight years, one of them substantially. But the magnitude of the savings is indisputably compelling and, even if it may be somewhat aberrational due to high congestion in the DC market, begs consideration by large electricity users currently paying to “lock in” fixed flat prices.

A model for hedging load and price risk in the Texas electricity market

International Nuclear Information System (INIS)

Coulon, Michael; Powell, Warren B.; Sircar, Ronnie

2013-01-01

Energy companies with commitments to meet customers' daily electricity demands face the problem of hedging load and price risk. We propose a joint model for load and price dynamics, which is motivated by the goal of facilitating optimal hedging decisions, while also intuitively capturing the key features of the electricity market. Driven by three stochastic factors including the load process, our power price model allows for the calculation of closed-form pricing formulas for forwards and some options, products often used for hedging purposes. Making use of these results, we illustrate in a simple example the hedging benefit of these instruments, while also evaluating the performance of the model when fitted to the Texas electricity market. - Highlights: • We present a structural model for electricity spot prices in the ERCOT market. • Relationships between power price and factors such as load and gas price are studied. • Seasonal patterns and load-dependent spikes are shown to be well captured. • Closed-form results for prices of forwards, options and spread options are derived. • We demonstrate the effectiveness of hedging power demand with forwards and options

Tax shift : eliminating subsidies and moving to full cost electricity pricing

International Nuclear Information System (INIS)

Gibbons, J.

2008-01-01

In order to ensure that Ontario's service needs are met at the lowest possible total cost, energy conservation and small-scale distributed generation options must be able to compete with large scale-centralized generation and transmission options on a level playing field. This report discussed how electricity is priced in Ontario. The report described the policies that subsidize coal and nuclear generation and promote excessive consumption of grid-supplied electricity. The report also presented an analysis of the impact of these subsidies and policies on Ontario's electricity consumption, electricity productivity, standard of living and air pollutant emissions. It described a practical strategy whereby these subsidies can be eliminated by recycling or shifting the monies currently spent on subsidies in a way that creates an incentive to reduce electricity consumption. It also described how full cost pricing could lead to a net financial benefit for residential customers as well as an adaptation strategy for businesses that would ensure that they remain competitive. Finally the report identified ten major subsidies that artificially reduce the cost of electricity in Ontario. These included below-market water royalty rates; corporate income tax revenue subsidy for nuclear debt; sales tax exemption; average cost pricing; and bulk metering. It was concluded that phasing out the subsidies for grid-supplied electricity and moving to full cost pricing will provide multiple benefits for Ontario. 36 refs., 5 tabs., 5 figs

Impact analysis of coal-electricity pricing linkage scheme in China based on stochastic frontier cost function

International Nuclear Information System (INIS)

Li, Hong-Zhou; Tian, Xian-Liang; Zou, Tao

2015-01-01

Highlights: • This study evaluates the coal-electricity pricing linkage policy in China. • Six stochastic frontier cost models are used to estimate efficiency measures. • The coal-electricity pricing linkage scheme is a double-edged sword. • We suggest the threshold value of 5% or group specific. - Abstract: This study evaluates the feasibility and fairness of 2012 amendment to coal-electricity pricing linkage policy in China. Our empirical design is based on several stochastic frontier cost functions and the results show that the amended pricing linkage scheme is a double-edged sword as follows. On the one hand, it provides incentives for less-efficient (with efficiency less than 90%) power plants to increase their efficiency. One the other hand, it imposes a penalty to highly-efficient power plants (with efficiency more than 90%). And even worse, the higher the efficiency is, the bigger the penalty will be. To make the current coal-electricity pricing linkage scheme more feasible, we suggest the threshold value of 5 instead of 10%, and a group specific threshold value instead of the current one-size-for-all practice

Cross subsidy removal in electricity pricing in India

International Nuclear Information System (INIS)

Bhattacharyya, Ranajoy; Ganguly, Amrita

2017-01-01

In India electricity price for agriculture is cross subsidized by the industries. The Indian government has started a process through which the extent of cross subsidization is gradually being reduced. The idea is to replace the cross subsidization by 2030 and introduce a rate structure that will increase with the amount of electricity usage. This paper uses the Computable General Equilibrium framework to evaluate the ex-ante impact of these policy changes on the Indian economy. The paper finds that removal of cross subsidies will increase inflation particularly food inflation resulting in a decline in household incomes more so in rural areas. Replacing cross subsidies with a progressive rate structure will compensate for only a small part of the negative effects of the removal of cross subsidies. Four other policy options are also investigated targeting household incomes, food inflation and general inflation. Most of these options do not work as the required increase in budget deficit is unlikely to be bearable to the government. The only feasible option appears to be a direct price subsidy to agricultural sector: in this case food prices are held down, inflation is moderate and effect on household incomes is minimal. - Highlights: • Removal of cross subsidies in electricity sector will increase inflation in India. • Different policy options are investigated targeting household incomes, food inflation and general inflation. • Feasible option appears to be a direct price subsidy to agricultural sector.

Retrospective modeling of the merit-order effect on wholesale electricity prices from distributed photovoltaic generation in the Australian National Electricity Market

International Nuclear Information System (INIS)

McConnell, Dylan; Hearps, Patrick; Eales, Dominic; Sandiford, Mike; Dunn, Rebecca; Wright, Matthew; Bateman, Lachlan

2013-01-01

In electricity markets that use a merit order dispatch system, generation capacity is ranked by the price that it is bid into the market. Demand is then met by dispatching electricity according to this rank, from the lowest to the highest bid. The last capacity dispatched sets the price received by all generation, ensuring the lowest cost provision of electricity. A consequence of this system is that significant deployments of low marginal cost electricity generators, including renewables, can reduce the spot price of electricity. In Australia, this prospect has been recognized in concern expressed by some coal-fired generators that delivering too much renewable generation would reduce wholesale electricity prices. In this analysis we calculate the likely reduction of wholesale prices through this merit order effect on the Australian National Electricity Market. We calculate that for 5 GW of capacity, comparable to the present per capita installation of photovoltaics in Germany, the reduction in wholesale prices would have been worth in excess of A$1.8 billion over 2009 and 2010, all other factors being equal. We explore the implications of our findings for feed-in tariff policies, and find that they could deliver savings to consumers, contrary to prevailing criticisms that they are a regressive form of taxation. - Highlights: ► We model the impact of photovoltaic generation on the Australian electricity market. ► Photovoltaic generation depresses electricity prices, particularly in summer peaks. ► Over the course of a year, the depression in wholesale prices has significant value. ► 5 GW of solar generation would have saved $1.8 billion in the market over two years. ► The depression of wholesale prices offsets the cost of support mechanisms

Do Canadian electricity prices reflect costs?

International Nuclear Information System (INIS)

Jaccard, M.

1993-01-01

In an article by Cairns and Heyes (1993), it is argued that electricity pricing in Canada diverges from cost due to inter-class rate design that results in cross-subsidies, subsidized cost of capital, intra-class rate design that lacks time-of-use pricing, and failure to collect differential rent. Some problems with the key components of the initial assumption that prices diverge from cost are examined. The premise that inter-class rate design results in cross-subsidies may be correct, but is difficult to test since unregulated crown utilities are not required to make the necessary information public. Cairns and Heyes are on firmer ground in their assertion that provincial government backing of utility debts leads to lower costs of capital than would otherwise occur. Quebec and British Columbia governments have recently undertaken revenue collection initiatives justified under the rationale of addressing this situation. However, there are problems with the assumption that lack of time-of-use pricing indicates cost/price divergence, since such pricing is especially relevant in capacity-critical systems. Most hydroelectric systems are energy-critical and time-of-use differentials are not appropriate. Finally, recent evidence suggests reassessing the differential rent assumptions of the 1980s. The economic rents estimated in that period may be more accurately described as windfall rents existing in the short term while markets adjust to erratic fuel prices and cost changes in nuclear and hydro energy. There may be good economic efficiency arguments against short-term rent collection strategies involving erratic price adjustments. 1 ref

Study on Stochastic Optimal Electric Power Procurement Strategies with Uncertain Market Prices

Science.gov (United States)

Sakchai, Siripatanakulkhajorn; Saisho, Yuichi; Fujii, Yasumasa; Yamaji, Kenji

The player in deregulated electricity markets can be categorized into three groups of GENCO (Generator Companies), TRNASCO (Transmission Companies), DISCO (Distribution Companies). This research focuses on the role of Distribution Companies, which purchase electricity from market at randomly fluctuating prices, and provide it to their customers at given fixed prices. Therefore Distribution companies have to take the risk stemming from price fluctuation of electricity instead of the customers. This entails the necessity to develop a certain method to make an optimal strategy for electricity procurement. In such a circumstance, this research has the purpose for proposing the mathematical method based on stochastic dynamic programming to evaluate the value of a long-term bilateral contract of electricity trade, and also a project of combination of the bilateral contract and power generation with their own generators for procuring electric power in deregulated market.

A Vector Autoregressive Model for Electricity Prices Subject to Long Memory and Regime Switching

DEFF Research Database (Denmark)

Haldrup, Niels; Nielsen, Frank; Nielsen, Morten Ørregaard

2007-01-01

A regime dependent VAR model is suggested that allows long memory (fractional integration) in each of the regime states as well as the possibility of fractional cointegra- tion. The model is relevant in describing the price dynamics of electricity prices where the transmission of power is subject...... to occasional congestion periods. For a system of bilat- eral prices non-congestion means that electricity prices are identical whereas congestion makes prices depart. Hence, the joint price dynamics implies switching between essen- tially a univariate price process under non-congestion and a bivariate price...

Household electricity consumers’ incentive to choose dynamic pricing under different taxation schemes

DEFF Research Database (Denmark)

Katz, Jonas; Kitzing, Lena; Schröder, Sascha Thorsten

2018-01-01

Dynamic pricing of retail electricity, as opposed to the widely applied average pricing, has often been proposed to enhance economic efficiency through demand response. The development of variable production from renewable energies and expectations about the installation of heat pumps and electric...

Three essays on pricing and risk management in electricity markets

Science.gov (United States)

Kotsan, Serhiy

2005-07-01

A set of three papers forms this dissertation. In the first paper I analyze an electricity market that does not clear. The system operator satisfies fixed demand at a fixed price, and attempts to minimize "cost" as indicated by independent generators' supply bids. No equilibrium exists in this situation, and the operator lacks information sufficient to minimize actual cost. As a remedy, we propose a simple efficient tax mechanism. With the tax, Nash equilibrium bids still diverge from marginal cost but nonetheless provide sufficient information to minimize actual cost, regardless of the tax rate or number of generators. The second paper examines a price mechanism with one price assigned for each level of bundled real and reactive power. Equilibrium allocation under this pricing approach raises system efficiency via better allocation of the reactive power reserves, neglected in the traditional pricing approach. Pricing reactive power should be considered in the bundle with real power since its cost is highly dependent on real power output. The efficiency of pricing approach is shown in the general case, and tested on the 30-bus IEEE network with piecewise linear cost functions of the generators. Finally the third paper addresses the problem of optimal investment in generation based on mean-variance portfolio analysis. It is assumed the investor can freely create a portfolio of shares in generation located on buses of the electrical network. Investors are risk averse, and seek to minimize the variance of the weighted average Locational Marginal Price (LMP) in their portfolio, and to maximize its expected value. I conduct simulations using a standard IEEE 68-bus network that resembles the New York - New England system and calculate LMPs in accordance with the PJM methodology for a fully optimal AC power flow solution. Results indicate that the network topology is a crucial determinant of the investment decision as line congestion makes it difficult to deliver power to

Effect of nuclear power generation on the electricity price in Korea

International Nuclear Information System (INIS)

Lee, Man Kee; Song, Kee Dong; Kim, Seung Soo; Kim, Sung Kee; Lee, Yung Kun

1994-12-01

The main purpose of this study is to estimate the effect of nuclear power generation on the electricity price by analysing electricity supply sector. The effects on electricity price changes are estimated in terms of following respects: - Restriction on the additional introduction of nuclear power plant. - CO 2 emission quantity control and carbon tax. A computer model by using Linear Programming optimization technique was also developed for these analyses. 10 figs, 12 tabs, 32 refs. (Author)

Optimal electricity price calculation model for retailers in a deregulated market

Energy Technology Data Exchange (ETDEWEB)

Yusta, J.M.; Dominguez-Navarro, J.A. [Zaragoza Univ., Dept. of Electrical Engineering, Zaragoza (Spain); Ramirez-Rosado, I.J. [La Rioja Univ., Dept. of Electrical Engineering, Logrono (Spain); Perez-Vidal, J.M. [McKinnon and Clarke, Energy Services Div., Zaragoza (Spain)

2005-07-01

The electricity retailing, a new business in deregulated electric power systems, needs the development of efficient tools to optimize its operation. This paper defines a technical-economic model of an electric energy service provider in the environment of the deregulated electricity market in Spain. This model results in an optimization problem, for calculating the optimal electric power and energy selling prices that maximize the economic profits obtained by the provider. This problem is applied to different cases, where the impact on the profits of several factors, such as the price strategy, the discount on tariffs and the elasticity of customer demand functions, is studied. (Author)

Optimal electricity price calculation model for retailers in a deregulated market

International Nuclear Information System (INIS)

Yusta, J.M.; Dominguez-Navarro, J.A.; Ramirez-Rosado, I.J.; Perez-Vidal, J.M.

2005-01-01

The electricity retailing, a new business in deregulated electric power systems, needs the development of efficient tools to optimize its operation. This paper defines a technical-economic model of an electric energy service provider in the environment of the deregulated electricity market in Spain. This model results in an optimization problem, for calculating the optimal electric power and energy selling prices that maximize the economic profits obtained by the provider. This problem is applied to different cases, where the impact on the profits of several factors, such as the price strategy, the discount on tariffs and the elasticity of customer demand functions, is studied. (Author)

Electric power prices: variable tendency depending on the country

International Nuclear Information System (INIS)

Anon.

1999-01-01

The deregulation of the electric power sector is very much in the news in most countries and at different stages. A study carried out by the national utility service (NUS) in 17 countries worldwide takes stock of the influence of deregulation on electric power prices. According to this study, the most important price increases are found in 4 non-European countries (Norway, South Africa, USA, New Zealand) while the most important decreases are found within Europe (Sweden 20%, Denmark 15.6%, Italy 12% and Germany 8%). In France the decrease of tariffs reaches only 3%. This short paper analyzes the evolution of prices in the different countries selected in the study, but no real tendency is outlined as the stage of competition is different in each country. (J.S.)

POWERS. Simulation of pricing and investment decisions in a liberalized Dutch electricity market

International Nuclear Information System (INIS)

Rijkers, F.A.M.; Battjes, J.J.; Janszen, F.H.A.; Kaag, M.

2001-02-01

With the liberalisation of the Dutch electricity market the electricity price will be divided into a network component and a commodity component. Further, liberalisation will change the determination of the commodity price. Before liberalisation the commodity price was centrally determined by the Sep (Samenwerkende Electriciteitsproductiebedrijven or Dutch Electricity Generating Board), but with the introduction of liberalisation prices will be determined by the market itself. To analyse the liberalised market a new model (POWERS) has been developed in which the new structure of the electricity market is incorporated and the increasing competition between energy companies is taken into account. An overview of the POWERS-model is presented in this report. The model is based on the system dynamics. This means that the decisions (regarding production volume, allocation of the plants, price setting) made by each market player is based on information from the previous period. Optimisation models that are based on the assumption of 'perfect foresight' do not apply to the electricity market. Currently, the model contains a detailed description of the production capacity of the current market players in the Netherlands. Among other purposes the model is suitable for determining an outlook of forward prices on the Dutch electricity market and for analysing the impacts of alternative strategies of the different market players on their profits. 4 refs

Impact of carbon cost on wholesale electricity price: A note on price pass-through issues

Energy Technology Data Exchange (ETDEWEB)

Kim, Wook [Korea Southern Power Co., 167, Samsung-dong, Gangnam-gu, Seoul 135-791 (Korea); Chattopadhyay, Deb [Saha International, Level 26, 385 Bourke Street, Melbourne, VIC 3000 (Australia); Park, Jong-bae [Electrical Engineering Department, Konkuk University, 1 Hwayang-dong, Kwanggin-gu, Seoul 143-701 (Korea)

2010-08-15

Carbon costs - either in the form of a carbon tax or through permit prices in an emissions trading scheme - would ultimately be reflected in higher electricity prices. Carbon cost ''pass-through'' is critical to the survival of existing coal generation assets and has been discussed widely as a measure of business impact in the electricity industry. This paper sets out in a structured way the factors that determine price pass-through and why this may differ greatly across different systems. Although the basic concept of price pass-through is simple, a clear understanding of the underlying factors is critical to developing insights on how carbon cost would impact on existing coal generation businesses. It is shown that pass-through can vary drastically if the underlying dispatch potential of generators varies significantly across alternative emissions reduction scenarios. It can also vary depending on the availability of competing cleaner forms of generation. Pass-through as a measure of business performance is, therefore, hard to generalize across different circumstances and should be interpreted carefully. (author)

Mixed price and load forecasting of electricity markets by a new iterative prediction method

International Nuclear Information System (INIS)

Amjady, Nima; Daraeepour, Ali

2009-01-01

Load and price forecasting are the two key issues for the participants of current electricity markets. However, load and price of electricity markets have complex characteristics such as nonlinearity, non-stationarity and multiple seasonality, to name a few (usually, more volatility is seen in the behavior of electricity price signal). For these reasons, much research has been devoted to load and price forecast, especially in the recent years. However, previous research works in the area separately predict load and price signals. In this paper, a mixed model for load and price forecasting is presented, which can consider interactions of these two forecast processes. The mixed model is based on an iterative neural network based prediction technique. It is shown that the proposed model can present lower forecast errors for both load and price compared with the previous separate frameworks. Another advantage of the mixed model is that all required forecast features (from load or price) are predicted within the model without assuming known values for these features. So, the proposed model can better be adapted to real conditions of an electricity market. The forecast accuracy of the proposed mixed method is evaluated by means of real data from the New York and Spanish electricity markets. The method is also compared with some of the most recent load and price forecast techniques. (author)

Electricity-market price and nuclear power plant shutdown: Evidence from California

International Nuclear Information System (INIS)

Woo, C.K.; Ho, T.; Zarnikau, J.; Olson, A.; Jones, R.; Chait, M.; Horowitz, I.; Wang, J.

2014-01-01

Japan's Fukushima nuclear disaster, triggered by the March 11, 2011 earthquake, has led to calls for shutting down existing nuclear plants. To maintain resource adequacy for a grid's reliable operation, one option is to expand conventional generation, whose marginal unit is typically fueled by natural-gas. Two timely and relevant questions thus arise for a deregulated wholesale electricity market: (1) what is the likely price increase due to a nuclear plant shutdown? and (2) what can be done to mitigate the price increase? To answer these questions, we perform a regression analysis of a large sample of hourly real-time electricity-market price data from the California Independent System Operator (CAISO) for the 33-month sample period of April 2010–December 2012. Our analysis indicates that the 2013 shutdown of the state's San Onofre plant raised the CAISO real-time hourly market prices by $6/MWH to $9/MWH, and that the price increases could have been offset by a combination of demand reduction, increasing solar generation, and increasing wind generation. - Highlights: • Japan's disaster led to calls for shutting down existing nuclear plants. • We perform a regression analysis of California's real-time electricity-market prices. • We estimate that the San Onofre plant shutdown has raised the market prices by $6/MWH to $9/MWH. • The price increases could be offset by demand reduction and renewable generation increase

Optimal operation strategies of compressed air energy storage (CAES) on electricity spot markets with fluctuating prices

DEFF Research Database (Denmark)

Lund, Henrik; Salgi, Georges; Elmegaard, Brian

2009-01-01

on electricity spot markets by storing energy when electricity prices are low and producing electricity when prices are high. In order to make a profit on such markets, CAES plant operators have to identify proper strategies to decide when to sell and when to buy electricity. This paper describes three...... plants will not be able to achieve such optimal operation, since the fluctuations of spot market prices in the coming hours and days are not known. Consequently, two simple practical strategies have been identified and compared to the results of the optimal strategy. This comparison shows that...... independent computer-based methodologies which may be used for identifying the optimal operation strategy for a given CAES plant, on a given spot market and in a given year. The optimal strategy is identified as the one which provides the best business-economic net earnings for the plant. In practice, CAES...

Response of residential electricity demand to price: The effect of measurement error

Energy Technology Data Exchange (ETDEWEB)

Alberini, Anna [Department of Agricultural Economics, University of Maryland (United States); Centre for Energy Policy and Economics (CEPE), ETH Zurich (Switzerland); Gibson Institute and Institute for a Sustainable World, School of Biological Sciences, Queen' s University Belfast, Northern Ireland (United Kingdom); Filippini, Massimo, E-mail: mfilippini@ethz.ch [Centre for Energy Policy and Economics (CEPE), ETH Zurich (Switzerland); Department of Economics, University of Lugano (Switzerland)

2011-09-15

In this paper we present an empirical analysis of the residential demand for electricity using annual aggregate data at the state level for 48 US states from 1995 to 2007. Earlier literature has examined residential energy consumption at the state level using annual or monthly data, focusing on the variation in price elasticities of demand across states or regions, but has failed to recognize or address two major issues. The first is that, when fitting dynamic panel models, the lagged consumption term in the right-hand side of the demand equation is endogenous. This has resulted in potentially inconsistent estimates of the long-run price elasticity of demand. The second is that energy price is likely mismeasured. To address these issues, we estimate a dynamic partial adjustment model using the Kiviet corrected Least Square Dummy Variables (LSDV) (1995) and the Blundell-Bond (1998) estimators. We find that the long-term elasticities produced by the Blundell-Bond system GMM methods are largest, and that from the bias-corrected LSDV are greater than that from the conventional LSDV. From an energy policy point of view, the results obtained using the Blundell-Bond estimator where we instrument for price imply that a carbon tax or other price-based policy may be effective in discouraging residential electricity consumption and hence curbing greenhouse gas emissions in an electricity system mainly based on coal and gas power plants. - Research Highlights: > Updated information on price elasticities for the US energy policy. > Taking into account measurement error in the price variable increase price elasticity. > Room for discouraging residential electricity consumption using price increases.

Response of residential electricity demand to price: The effect of measurement error

International Nuclear Information System (INIS)

Alberini, Anna; Filippini, Massimo

2011-01-01

In this paper we present an empirical analysis of the residential demand for electricity using annual aggregate data at the state level for 48 US states from 1995 to 2007. Earlier literature has examined residential energy consumption at the state level using annual or monthly data, focusing on the variation in price elasticities of demand across states or regions, but has failed to recognize or address two major issues. The first is that, when fitting dynamic panel models, the lagged consumption term in the right-hand side of the demand equation is endogenous. This has resulted in potentially inconsistent estimates of the long-run price elasticity of demand. The second is that energy price is likely mismeasured. To address these issues, we estimate a dynamic partial adjustment model using the Kiviet corrected Least Square Dummy Variables (LSDV) (1995) and the Blundell-Bond (1998) estimators. We find that the long-term elasticities produced by the Blundell-Bond system GMM methods are largest, and that from the bias-corrected LSDV are greater than that from the conventional LSDV. From an energy policy point of view, the results obtained using the Blundell-Bond estimator where we instrument for price imply that a carbon tax or other price-based policy may be effective in discouraging residential electricity consumption and hence curbing greenhouse gas emissions in an electricity system mainly based on coal and gas power plants. - Research Highlights: → Updated information on price elasticities for the US energy policy. → Taking into account measurement error in the price variable increase price elasticity. → Room for discouraging residential electricity consumption using price increases.

Optimal pricing and investment in the electricity sector in Tamil Nadu, India

Science.gov (United States)

Murthy, Ranganath Srinivas

2001-07-01

Faulty pricing policies and inadequate investment in the power sector are responsible for the chronic power shortages that plague Tamil Nadu and the rest of India. Formulae for optimal pricing rules are derived for a social welfare maximizing Electricity Board which sells electricity that is used both as an intermediate, and as a final good. Because of distributional constraints, the optimal prices deviate systematically from marginal costs. Optimal relative price-marginal cost differentials are computed for Tamil Nadu, and are found to indicate a lower degree of subsidization than the prevailing prices. The rationalization of electricity tariffs would very likely increase the Board's revenues. The cost-effectiveness of nuclear power in India is examined by comparing actual data for the Madras Atomic Power Project and the Singrauli coal-fired thermal power station. The conventional (non-environmental) costs of power generation are compared at both market prices and shadow prices, calculated according to the UNIDO guidelines for project evaluation. Despite favorable assumptions for the costs of the nuclear plant, coal had a decided edge over nuclear in Tamil Nadu. Remarkably, the edge varied little when market prices are replaced by shadow prices in the computations. With regard to the environmental costs, far too much remains unknown. More research is therefore needed on the environmental impacts of both types of power generation before a final choice can be made.

Auction development for the price-based electric power industry

Science.gov (United States)

Dekrajangpetch, Somgiat

The restructuring of the electric power industry is to move away from the cost-based monopolistic environment of the past to the priced-based competitive environment. As the electric power industry is restructuring in many places, there are still many problems that need to be solved. The work in this dissertation contributes to solve some of the electric power auction problems. The majority of this work is aimed to help develop good markets. A LaGrangian relaxation (LR) Centralized Daily Commitment Auction (CDCA) has been implemented. It has been shown that the solution might not be optimal nor fair to some generation companies (GENCOs) when identical or similar generating units participate in a LR CDCA based auction. Supporting information for bidding strategies on how to change unit data to enhance the chances of bid acceptance has been developed. The majority of this work is based on Single Period Commodity Auction (SPCA). Alternative structures for the SPCA are outlined. Whether the optimal solution is degenerated is investigated. Good pricing criteria are summarized and the pricing method following good pricing criteria is developed. Electricity is generally considered as a homogeneous product. When availability level is used as additional characteristic to distinct electricity, electricity can be considered a heterogeneous product. The procedure to trade electricity as a heterogeneous product is developed. The SPCA is formulated as a linear program. The basic IPLP algorithm has been extended so that sensitivity analysis can be performed as in the simplex method. Sensitivity analysis is used to determine market reach. Additionally, sensitivity analysis is used in combination with the investigation of historical auction results to provide raw data for power system expansion. Market power is a critical issue in electric power deregulation. Firms with market power have an advantage over other competitor firms in terms of market reach. Various approaches to

Competitive electricity markets around the world: approaches to price risk management

International Nuclear Information System (INIS)

Masson, G.S.

1999-01-01

This chapter focuses on wholesale electricity markets, and traces the histories of the US and UK power industries. Risk management in the new electricity market is examined covering price risk, location basis risk, volume risk, and margin and cross-commodity risk. Specific competitive market systems that have been implemented around the world including mandatory pools, voluntary pools, and bilateral markets are discussed. Panels describing the functions of ancillary services, electricity price volatility, and the problems of capacity payments and the UK pool are presented

Market price of risk implied by Asian-style electricity options and futures

International Nuclear Information System (INIS)

Weron, Rafal

2008-01-01

In this paper we propose a jump-diffusion type model which recovers the main characteristics of electricity spot price dynamics in the Nordic market, including seasonality, mean-reversion and spiky behavior. We show how the calibration of the market price of risk to actively traded futures contracts allows for efficient valuation of Nord Pool's Asian-style options written on the spot electricity price. Furthermore, we study the evolution of the market price of risk (and the risk premium) over a three year time period and compare the obtained results with those reported in the literature. (author)

Market price of risk implied by Asian-style electricity options and futures

Energy Technology Data Exchange (ETDEWEB)

Weron, Rafal [Hugo Steinhaus Center for Stochastic Methods, Institute of Mathematics and Computer Science, Wroclaw University of Technology, 50-370 Wroclaw (Poland)

2008-05-15

In this paper we propose a jump-diffusion type model which recovers the main characteristics of electricity spot price dynamics in the Nordic market, including seasonality, mean-reversion and spiky behavior. We show how the calibration of the market price of risk to actively traded futures contracts allows for efficient valuation of Nord Pool's Asian-style options written on the spot electricity price. Furthermore, we study the evolution of the market price of risk (and the risk premium) over a three year time period and compare the obtained results with those reported in the literature. (author)

Loss aversion and price volatility as determinants of attitude towards and preference for variable price in the Swedish electricity market

International Nuclear Information System (INIS)

Juliusson, E. Asgeir; Gamble, Amelie; Gaerling, Tommy

2007-01-01

The results of a survey of a random sample of 488 Swedish residents showed that a positive attitude towards and preference for a variable price agreement with the incumbent electricity supplier was negatively affected by loss aversion, and a positive attitude also negatively affected by beliefs about price volatility. Although correlated with attitude and preference, age, education, and current choice of a variable price agreement had no independent effects. Income and current electricity costs had no effects. (author)

Green pricing: Customer-oriented marketing of the electricity industry

International Nuclear Information System (INIS)

Weller, T.

1998-01-01

There are at present about 15 established projects launched by energy suppliers in Germany which deserve to be called ''green pricing'' marketing strategies, and about an equal number of further projects at various stages of development which also offer as a ''green'' incentive for customers electricity from renewable energy sources. Worldwide, there are about 50 established green pricing projects, offered primarily in the USA, Switzerland and the Netherlands, and in Germany. The targeted customers of these projects for the time being are exclusively households that cannot easily switch over to other than their local suppliers. It can be expected that with progressive market liberalisation in Great Britain, the USA and, finally, in Germany, competition for this customer group will rapidly increase the number of green pricing marketing projects in these countries. This is why the article here presents a thorough analysis of the specific features of green pricing contracts, their impact on enhanced development and application of the technology for electricity generation from renewables, and a forecast on future developments. (orig./CB) [de

Price Formation and Competition in the Swedish Electricity Market. Main findings of ER 2006:13

International Nuclear Information System (INIS)

2006-11-01

The Nordic electricity market can be divided into a Nordic wholesale market - the producer market - and the, national, retail markets. Nord Pool organises a 24-hour market for the physical trade of electricity, the spot market. Nord Pool also has a market place for so-called financial trade where players can (among other things) hedge themselves against price risks. Thus, the trade at Nord Pool represents the basis for trading with electricity throughout the entire Nordic market. In addition to the trade at Nord Pool, there is also bilateral trading between buyers and sellers. The report has been arranged as follows. Initially the functioning of the wholesale market is analysed, the issues addressed include the price formation in the spot market, the functioning of the financial market, as well as the price development in the spot market. The section ends with an analysis of the competitive situation in the Nordic wholesale market with a focus on Sweden. The next section focuses on how a potential introduction of Elspot areas in Sweden might affect the conditions for competition. The third section looks at certain conditions in the Swedish retail market and on certain consequences for households and electricity-intensive industry due to the price increases in recent years. The report concludes with the Energy Markets Inspectorate's deliberations on the need for measures to be undertaken in the Swedish and Nordic electricity market. The concentration on the Nordic electricity market is at a level where the authorities monitoring competition need to counteract changes that lead to further concentration. The present structure of the market, with an increasingly high concentration and co-ownership of power stations, also places demands on the authorities responsible for monitoring competition to implement measures designed to detect and to prevent the possible abuse of market power. There is a substantial need for research on competition and efficiency on the

Strategic pricing of grid access under partial price-caps. Electricity distribution in England and Wales

International Nuclear Information System (INIS)

Riechmann, C.

2000-01-01

It is perceived in public debate that monopolistic network operators (who are vertically integrated into competitively organised activities) would raise excessive access charges to derail competition by newcomers. Economic reasoning, however, suggests that the level of access charges is, at least in a simple setting, irrelevant for the intensity of entry by newcomers. In a setting where access charges are price-cap regulated, theoretical considerations and empirical findings for the case of electricity distribution in England and Wales even suggest that inefficiently high access charges correspond with intense market entry. Efficiency concerns remain, nonetheless. If regulated by a practicable partial price-cap, the network operator may enforce monopolistic access charges in certain market segments. Access charges in other segments may be lowered strategically and may even be cross-subsidised. 36 refs

Markets and pricing for interruptible electric power

International Nuclear Information System (INIS)

Gedra, T.W.; Varaiya, P.P.

1993-01-01

The authors propose a market for interruptible, or callable, forward contracts for electric power, in which the consumer grants the power supplier the right to interrupt a given unit of load in return for a price discount. The callable forward contracts are traded continuously until the time of use. This allows recourse for those customers with uncertain demand, while risk-averse consumers can minimize their price risk by purchasing early. Callable forward contracts are simple in form, and can be directly incorporated into the utility's economic dispatch procedure

Reforming residential electricity tariff in China: Block tariffs pricing approach

International Nuclear Information System (INIS)

Sun, Chuanwang; Lin, Boqiang

2013-01-01

The Chinese households that make up approximately a quarter of world households are facing a residential power tariff reform in which a rising block tariff structure will be implemented, and this tariff mechanism is widely used around the world. The basic principle of the structure is to assign a higher price for higher income consumers with low price elasticity of power demand. To capture the non-linear effects of price and income on elasticities, we set up a translog demand model. The empirical findings indicate that the higher income consumers are less sensitive than those with lower income to price changes. We further put forward three proposals of Chinese residential electricity tariffs. Compared to a flat tariff, the reasonable block tariff structure generates more efficient allocation of cross-subsidies, better incentives for raising the efficiency of electricity usage and reducing emissions from power generation, which also supports the living standards of low income households. - Highlights: • We design a rising block tariff structure of residential electricity in China. • We set up a translog demand model to find the non-linear effects on elasticities. • The higher income groups are less sensitive to price changes. • Block tariff structure generates more efficient allocation of cross-subsidies. • Block tariff structure supports the living standards of low income households

Impacts of high energy prices on long-term energy-economic scenarios for Germany

Energy Technology Data Exchange (ETDEWEB)

Krey, V.; Markewitz, P. [Research Center Juelich, Inst. of Energy Res., Systems Analysis and Technology Evaluation, Juelich (Germany); Horn, M. [DIW Berlin, Berlin (Germany); Matthes, C.; Graichen, V.; Harthan, R.O.; Repenning, J. [Oeko-Institut, Berlin (Germany)

2007-05-15

Prices of oil and other fossil fuels on global markets have reached a high level in recent years. These levels were not able to be reproduced on the basis of scenarios and prognoses that were published in the past. New scenarios, based on higher energy price trajectories, have appeared only recently. The future role of various energy carriers and technologies in energy-economic scenarios will greatly depend on the level of energy prices. Therefore, an analysis of the impact of high energy prices on long-term scenarios for Germany was undertaken. Based on a reference scenario with moderate prices, a series of consistent high price scenarios for primary and secondary energy carriers were developed. Two scenarios with (i) continuously rising price trajectories and (ii) a price shock with a price peak during the period 2010-15 and a subsequent decline to the reference level are analysed. Two types of models have been applied in the analysis. The IKARUS energy systems optimisation model covers the whole of the German energy system from primary energy supply down to the end-use sectors. Key results in both high price scenarios include a replacement of natural gas by hard coal and renewable energy sources in electricity and heat generation. Backstop technologies like coal liquefaction begin to play a role under such conditions. Up to 10% of final energy consumption is saved in the end-use sectors, with the residential and transport sector being the greatest contributors. Even without additional restrictions, CO{sub 2} emissions significantly drop in comparison to the reference scenario. The ELIAS electricity investment analysis model focuses on the power sector. In the reference scenario with current allocation rules in the emissions trading scheme, the CO{sub 2} emissions decrease relatively steadily. The development is characterised by the phaseout of nuclear energy which is counterweighted by the increase of renewable. In the high price scenario, the CO{sub 2

A comparison of pay-as-bid and marginal pricing in electricity markets

Science.gov (United States)

Ren, Yongjun

This thesis investigates the behaviour of electricity markets under marginal and pay-as-bid pricing. Marginal pricing is believed to yield the maximum social welfare and is currently implemented by most electricity markets. However, in view of recent electricity market failures, pay-as-bid has been extensively discussed as a possible alternative to marginal pricing. In this research, marginal and pay-as-bid pricing have been analyzed in electricity markets with both perfect and imperfect competition. The perfect competition case is studied under both exact and uncertain system marginal cost prediction. The comparison of the two pricing methods is conducted through two steps: (i) identify the best offer strategy of the generating companies (gencos); (ii) analyze the market performance under these optimum genco strategies. The analysis results together with numerical simulations show that pay-as-bid and marginal pricing are equivalent in a perfect market with exact system marginal cost prediction. In perfect markets with uncertain demand prediction, the two pricing methods are also equivalent but in an expected value sense. If we compare from the perspective of second order statistics, all market performance measures exhibit much lower values under pay-as-bid than under marginal pricing. The risk of deviating from the mean is therefore much higher under marginal pricing than under pay-as-bid. In an imperfect competition market with exact demand prediction, the research shows that pay-as-bid pricing yields lower consumer payments and lower genco profits. This research provides quantitative evidence that challenges some common claims about pay-as-bid pricing. One is that under pay-as-bid, participants would soon learn how to offer so as to obtain the same or higher profits than what they would have obtained under marginal pricing. This research however shows that, under pay-as-bid, participants can at best earn the same profit or expected profit as under marginal

Feed-in tariff and market electricity price comparison. The case of cogeneration units in Croatia

International Nuclear Information System (INIS)

Uran, Vedran; Krajcar, Slavko

2009-01-01

In August 2007, the Government of the Republic of Croatia instituted a feed-in tariff system, requiring the Croatian Electricity Market Operator (HROTE) to off-take the electricity produced from renewable energy sources or cogeneration units fueled by natural gas. Analysis of the off-take electricity price range, which depends on the net electrical output and electricity market trends, indicates that it is more cost effective for cogeneration units greater than 1 MW to sell their electricity on the exchange market. This was confirmed by developing a mathematical model to calculate the cost-effectiveness ratio of a cogeneration unit. This ratio represents the relation between the profit spread, i.e. the difference between the profit generated from selling the electricity on the exchange market and the profit made from dispatching the electricity to HROTE, as well as the total investment costs. The model can be applied for changes in certain parameters, such as the net electrical output, volatility and spot electricity price. The Monte Carlo method is used to obtain the most probable cost-effectiveness ratio and average future electricity price. Together with these two economic parameters and market price analysis, it is possible to calculate and calibrate an acceptable off-take electricity price. (author)

Predicting Baseline for Analysis of Electricity Pricing

Energy Technology Data Exchange (ETDEWEB)

Kim, T. [Ulsan National Inst. of Science and Technology (Korea, Republic of); Lee, D. [Ulsan National Inst. of Science and Technology (Korea, Republic of); Choi, J. [Ulsan National Inst. of Science and Technology (Korea, Republic of); Spurlock, A. [Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States); Sim, A. [Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States); Todd, A. [Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States); Wu, K. [Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)

2016-05-03

To understand the impact of new pricing structure on residential electricity demands, we need a baseline model that captures every factor other than the new price. The standard baseline is a randomized control group, however, a good control group is hard to design. This motivates us to devlop data-driven approaches. We explored many techniques and designed a strategy, named LTAP, that could predict the hourly usage years ahead. The key challenge in this process is that the daily cycle of electricity demand peaks a few hours after the temperature reaching its peak. Existing methods rely on the lagged variables of recent past usages to enforce this daily cycle. These methods have trouble making predictions years ahead. LTAP avoids this trouble by assuming the daily usage profile is determined by temperature and other factors. In a comparison against a well-designed control group, LTAP is found to produce accurate predictions.

Analysis on learning curves of end-use appliances for the establishment of price-sensitivity load model in competitive electricity market

Energy Technology Data Exchange (ETDEWEB)

Hwang, Sung Wook; Kim, Jung Hoon [Hongik University (Korea); Song, Kyung Bin [Keimyung University (Korea); Choi, Joon Young [Jeonju University (Korea)

2001-07-01

The change of the electricity charge from cost base to price base due to the introduction to the electricity market competition causes consumer to choose a variety of charge schemes and a portion of loads to be affected by this change. Besides, it is required the index that consolidate the price volatility experienced on the power exchange with gaming and strategic bidding by suppliers to increase profits. Therefore, in order to find a mathematical model of the sensitively-responding to-price loads, the price-sensitive load model is needed. And the development of state-of- the-art technologies affects the electricity price, so the diffusion of high-efficient end-uses and these price affect load patterns. This paper shows the analysis on learning curves algorithms which is used to investigate the correlation of the end-uses' price and load patterns. (author). 6 refs., 4 figs., 4 tabs.

Pay for load demand - electricity pricing with load demand component

International Nuclear Information System (INIS)

Pyrko, Jurek; Sernhed, Kerstin; Abaravicius, Juozas

2003-01-01

This publication is part of a project called Direct and Indirect Load Control in Buildings. Peak load problems have attracted considerable attention in Sweden during last three winters, caused by a significant decrease in available reserve power, which is a consequence of political decisions and liberalisation of the electricity market. A possible way to lower peak loads, avoiding electricity shortages and reducing electricity costs both for users and utilities, is to make customers experience the price difference during peak load periods and, in this way, become more aware of their energy consumption pattern and load demand. As of January 1st 2001, one of the Swedish energy utilities - Sollentuna Energi - operating in the Stockholm area, introduced a new electricity tariff with differentiated grid fees based on a mean value of the peak load every month. This tariff was introduced for all residential customers in the service area. The objective of this study is to investigate the extent to which a Load Demand Component, included in electricity pricing, can influence energy use and load demand in residential buildings. What are the benefits and disadvantages for customers and utilities? This paper investigates the impact of the new tariff on the utility and different types of typical residential customers, making comparisons with previous tariff. Keywords Load demand, electricity pricing, tariff, residential customers, energy behaviour

Rising natural gas and electricity prices in the Netherlands

International Nuclear Information System (INIS)

Roggen, M.

2004-01-01

In a free market, the price for electricity rises rather than falls. And as for the gas price, the consumer will be facing strong fluctuations. For that matter, it is only slightly connected with the liberalization of the market. An employee of Roland Berger Strategy Consultants has delved deeply into the matter, down to the euro [nl

Price Signals from Electricity Markets and Subsidy Schemes for Renewable Sources

International Nuclear Information System (INIS)

Sabolic, D.

2013-01-01

Increasing share of renewable generation itself gives rise to price risks on the electricity markets. Subsidy schemes, in general, additionally distort price signals produced by economic mechanisms of otherwise free markets. In the electricity industry, subsidy schemes, once designed merely to incentivize electricity system decarbonization in its kick-off phase, seem to have grown to such a volume, that they, too, started to profoundly interfere with the whole market structure, and to distort price signals that used to govern long-term development of an adequately structured generation system. This article was made as an attempt to discuss contemporary electricity system policies in relation to RES integration. The economic relations in the sector are growingly influenced, or sometimes even hard-handedly guided, by political institutions, rather than by economic interests of the investors, which may in turn cause considerable problems in achieving ultimate policy goals due to unsustainability of such an economic arrangement.(author)

Renewable Energy and Electricity Prices in Spain

OpenAIRE

Liliana Gelabert; Xavier Labandeira; Pedro Linares

2011-01-01

Growing concerns about climate change and energy dependence are driving specific policies to support renewable or more efficient energy sources in many regions, particularly in the production of electricity. These policies have a non-negligible cost, and therefore a careful assessment of their impacts seems necessary. In particular, one of the most-debated impacts is their effect on electricity prices, for which there have been some ex-ante studies, but few ex-post studies. This article prese...

Introducing of Green Pricing in the Korean Electricity Sector

Energy Technology Data Exchange (ETDEWEB)

Boo, K.J. [Korea Energy Economics Institute, Euiwang (Korea)

2001-11-01

In recent years, the Korean electricity sector has been undergoing restructuring, represented by de-regulation and promotion of competition. Competition will, eventually, force electricity power producers to overly rely on cheap fuels such as coal and nuclear in order to reduce the cost of power generation, which is against the international Green Round, including the UNFCCC. Accordingly, some measures are needed not to let such an market failure discourage the efforts to protect the environment. Up to date, a number of policy measures have been worked out by the Korean government to promote the use of renewable energy in power generation. Such efforts, however, have not been quite successful. Innovative policy tools are called for to promote renewable energy-base power generation in the emerging competitive electricity market. Among various approaches that have been tried and worked out in the developed countries to adequately address this problem, a most popular approach is green pricing. Green pricing is to let the customers pay for the additional cost incurred from installing renewable energy-based generating facilities, consequently making it viable and promoting an increased use of renewables in the power generation. Accordingly, a market research to investigate the willingness to pay for this premium was conducted as a prerequisite to design a green pricing. The major findings of this market research are: First, while limited to the industrial and buildings sectors, awareness of environmental and green pricing is not so disappointing as compared with those in the develop countries(41.3%). Second, companies have not yet fully developed the concept of green pricing and are mainly motivated to purchase green power in the perspective of a great cause rather than in pursuit of direct and indirect economic benefits. Third, regarding fuel choice for power generation, respondents express a strong opposition to nuclear, coal, and oil, while they are more favorable to

Marginal Cost Pricing in a World without Perfect Competition: Implications for Electricity Markets with High Shares of Low Marginal Cost Resources

Energy Technology Data Exchange (ETDEWEB)

Frew, Bethany A. [National Renewable Energy Lab. (NREL), Golden, CO (United States); Clark, Kara [National Renewable Energy Lab. (NREL), Golden, CO (United States); Bloom, Aaron P. [National Renewable Energy Lab. (NREL), Golden, CO (United States); Milligan, Michael [National Renewable Energy Lab. (NREL), Golden, CO (United States)

2017-12-02

A common approach to regulating electricity is through auction-based competitive wholesale markets. The goal of this approach is to provide a reliable supply of power at the lowest reasonable cost to the consumer. This necessitates market structures and operating rules that ensure revenue sufficiency for all generators needed for resource adequacy purposes. Wholesale electricity markets employ marginal-cost pricing to provide cost-effective dispatch such that resources are compensated for their operational costs. However, marginal-cost pricing alone cannot guarantee cost recovery outside of perfect competition, and electricity markets have at least six attributes that preclude them from functioning as perfectly competitive markets. These attributes include market power, externalities, public good attributes, lack of storage, wholesale price caps, and ineffective demand curve. Until (and unless) these failures are ameliorated, some form of corrective action(s) will be necessary to improve market efficiency so that prices can correctly reflect the needed level of system reliability. Many of these options necessarily involve some form of administrative or out-of-market actions, such as scarcity pricing, capacity payments, bilateral or other out-of-market contracts, or some hybrid combination. A key focus with these options is to create a connection between the electricity market and long-term reliability/loss-of-load expectation targets, which are inherently disconnected in the native markets because of the aforementioned market failures. The addition of variable generation resources can exacerbate revenue sufficiency and resource adequacy concerns caused by these underlying market failures. Because variable generation resources have near-zero marginal costs, they effectively suppress energy prices and reduce the capacity factors of conventional generators through the merit-order effect in the simplest case of a convex market; non-convexities can also suppress prices.

The Impact of Intermittent Renewable Production and Market Coupling on the Convergence of French and German Electricity Prices

International Nuclear Information System (INIS)

Keppler, Jan Horst; Le Pen, Yannick; Phan, Sebastien; Boureau, Charlotte

2014-10-01

Interconnecting two adjacent areas of electricity production generates benefits in combined consumer surplus and welfare by allowing electricity to flow from the low cost area to the high cost area. It will lower prices in the high cost area, raise them in the low cost area and will thus have prices in the two areas converge. With unconstrained interconnection capacity, price convergence is, of course, complete and the two areas are merged into a single area. With constrained interconnection capacity, the challenge for transport system operators (TSOs) and market operators is using the available capacity in an optimal manner. This was the logic behind the 'market coupling' mechanism installed by European power market operators in November 2009 in the Central Western Europe (CWE) electricity market, of which France and Germany constitute by far the two largest members. Market coupling aims at optimising welfare by ensuring that buyers and sellers exchange electricity at the best possible price taking into account the combined order books all power exchanges involved as well as the available transfer capacities between different bidding zones. By doing so, interconnection capacity is allocated to those who value it most. As predicted by theory and common sense, electricity prices in France and Germany converged substantially in 2010 and 2011 in the wake of market coupling with substantive increases of consumer surplus. These benefits accrued in both areas. In first approximation, France exports base-load power, while Germany exports peak-load power, thus exporting and importing at different times of the day. However since 2012, electricity prices between France and Germany diverged, a process that accelerated during 2013. The hypothesis this paper is exploring is that this divergence is due to the significant production of variable renewables (wind and solar PV) in Germany, which tends to cluster during certain hours. Typically, solar production around noontime

Intra-day and regime-switching dynamics in electricity price formation

International Nuclear Information System (INIS)

Karakatsani, Nektaria V.; Bunn, Derek W.

2008-01-01

This paper analyses the complex, non-linear effects of spot price drivers in wholesale electricity markets: their intra-day dynamics and transient irregularities. The context is the UK market, after the reforms introduced in March 2001, analysed with an original set of price drivers reflecting economic, technical, strategic, risk, behavioural and market design effects. Models are estimated separately as daily time-series of the 48 half-hourly trading periods. All coefficients exhibit substantial intra-day variation, relating to the heterogeneity of operating plants and market design aspects. This reveals a market responding to economic fundamentals and plant operating properties, with learning and emergent financial characteristics, as well as some strategic manipulation of capacity, most effectively exercised by the more flexible plants. Using regime-switching parameters, the effects of capacity margin and inter-day capacity adjustment are elucidated, suggesting rent-seeking behaviour, despite the relatively low prices at the time. Overall, high-frequency, aggregate fundamental price models can usefully uncover critical aspects of market performance, evolution and agent behaviour. (author)

Electricity market auction settings in a future Danish electricity system with a high penetration of renewable energy sources - A comparison of marginal pricing and pay-as-bid

International Nuclear Information System (INIS)

Nielsen, Steffen; Sorknaes, Peter; Ostergaard, Poul Alberg

2011-01-01

The long-term goal for Danish energy policy is to be free of fossil fuels through the increasing use of renewable energy sources (RES) including fluctuating renewable electricity (FRE). The Danish electricity market is part of the Nordic power exchange, which uses a Marginal Price auction system (MPS) for the day-ahead auctions. The market price is thus equal to the bidding price of the most expensive auction winning unit. In the MPS, the FRE bid at prices of or close to zero resulting in reduced market prices during hours of FRE production. In turn, this reduces the FRE sources' income from market sales. As more FRE is implemented, this effect will only become greater, thereby reducing the income for FRE producers. Other auction settings could potentially help to reduce this problem. One candidate is the pay-as-bid auction setting (PAB), where winning units are paid their own bidding price. This article investigates the two auction settings, to find whether a change of auction setting would provide a more suitable frame for large shares of FRE. This has been done with two energy system scenarios with different shares of FRE. From the analysis, it is found that MPS is generally better for the FRE sources. The result is, however, very sensitive to the base assumptions used for the calculations. -- Highlights: → In this study two different auction settings for the Danish electricity market are compared. → Two scenarios are used in the analyses, one representing the present system and one representing a future 100% renewable energy system. → We find that marginal price auction system is most suitable for supporting fluctuating renewable energy in both scenarios. → The results are very sensitive to the assumptions about bidding prices for each technology.

Electricity price forecasting in deregulated markets: A review and evaluation

Energy Technology Data Exchange (ETDEWEB)

Aggarwal, Sanjeev Kumar; Saini, Lalit Mohan; Kumar, Ashwani [Department of Electrical Engineering, National Institute of Technology, Kurukshetra, Haryana (India)

2009-01-15

The main methodologies used in electricity price forecasting have been reviewed in this paper. The following price-forecasting techniques have been covered: (i) stochastic time series, (ii) causal models, and (iii) artificial intelligence based models. The quantitative analysis of the work done by various authors has been presented based on (a) time horizon for prediction, (b) input variables, (c) output variables, (d) results, (e) data points used for analysis, (f) preprocessing technique employed, and (g) architecture of the model. The results have been presented in the form of tables for ease of comparison. Classification of various price-influencing factors used by different researchers has been done and put for reference. Application of various models as applied to different electricity markets is also presented for consideration. (author)

Electricity price forecasting in deregulated markets: A review and evaluation

International Nuclear Information System (INIS)

Aggarwal, Sanjeev Kumar; Saini, Lalit Mohan; Kumar, Ashwani

2009-01-01

The main methodologies used in electricity price forecasting have been reviewed in this paper. The following price-forecasting techniques have been covered: (i) stochastic time series, (ii) causal models, and (iii) artificial intelligence based models. The quantitative analysis of the work done by various authors has been presented based on (a) time horizon for prediction, (b) input variables, (c) output variables, (d) results, (e) data points used for analysis, (f) preprocessing technique employed, and (g) architecture of the model. The results have been presented in the form of tables for ease of comparison. Classification of various price-influencing factors used by different researchers has been done and put for reference. Application of various models as applied to different electricity markets is also presented for consideration. (author)

Electricity prices forecasting by automatic dynamic harmonic regression models

International Nuclear Information System (INIS)

Pedregal, Diego J.; Trapero, Juan R.

2007-01-01

The changes experienced by electricity markets in recent years have created the necessity for more accurate forecast tools of electricity prices, both for producers and consumers. Many methodologies have been applied to this aim, but in the view of the authors, state space models are not yet fully exploited. The present paper proposes a univariate dynamic harmonic regression model set up in a state space framework for forecasting prices in these markets. The advantages of the approach are threefold. Firstly, a fast automatic identification and estimation procedure is proposed based on the frequency domain. Secondly, the recursive algorithms applied offer adaptive predictions that compare favourably with respect to other techniques. Finally, since the method is based on unobserved components models, explicit information about trend, seasonal and irregular behaviours of the series can be extracted. This information is of great value to the electricity companies' managers in order to improve their strategies, i.e. it provides management innovations. The good forecast performance and the rapid adaptability of the model to changes in the data are illustrated with actual prices taken from the PJM interconnection in the US and for the Spanish market for the year 2002. (author)

Hourly price elasticity pattern of electricity demand in the German day-ahead market

OpenAIRE

Knaut, Andreas; Paulus, Simon

2016-01-01

System security in electricity markets relies crucially on the interaction between demand and supply over time. However, research on electricity markets has been mainly focusing on the supply side arguing that demand is rather inelastic. Assuming perfectly inelastic demand might lead to delusive statements regarding the price formation in electricity markets. In this article we quantify the short-run price elasticity of electricity demand in the German day-ahead market and show that demand is...

Electricity price forecasting using Enhanced Probability Neural Network

International Nuclear Information System (INIS)

Lin, Whei-Min; Gow, Hong-Jey; Tsai, Ming-Tang

2010-01-01

This paper proposes a price forecasting system for electric market participants to reduce the risk of price volatility. Combining the Probability Neural Network (PNN) and Orthogonal Experimental Design (OED), an Enhanced Probability Neural Network (EPNN) is proposed in the solving process. In this paper, the Locational Marginal Price (LMP), system load and temperature of PJM system were collected and the data clusters were embedded in the Excel Database according to the year, season, workday, and weekend. With the OED to smooth parameters in the EPNN, the forecasting error can be improved during the training process to promote the accuracy and reliability where even the ''spikes'' can be tracked closely. Simulation results show the effectiveness of the proposed EPNN to provide quality information in a price volatile environment. (author)

Adaptive short-term electricity price forecasting using artificial neural networks in the restructured power markets

International Nuclear Information System (INIS)

Yamin, H.Y.; Shahidehpour, S.M.; Li, Z.

2004-01-01

This paper proposes a comprehensive model for the adaptive short-term electricity price forecasting using Artificial Neural Networks (ANN) in the restructured power markets. The model consists: price simulation, price forecasting, and performance analysis. The factors impacting the electricity price forecasting, including time factors, load factors, reserve factors, and historical price factor are discussed. We adopted ANN and proposed a new definition for the MAPE using the median to study the relationship between these factors and market price as well as the performance of the electricity price forecasting. The reserve factors are included to enhance the performance of the forecasting process. The proposed model handles the price spikes more efficiently due to considering the median instead of the average. The IEEE 118-bus system and California practical system are used to demonstrate the superiority of the proposed model. (author)

Simulation of hybrid renewable microgeneration systems for variable electricity prices

International Nuclear Information System (INIS)

Brandoni, C.; Renzi, M.; Caresana, F.; Polonara, F.

2014-01-01

This paper addresses a hybrid renewable system that consists of a micro-Combined Cooling Heat and Power (CCHP) unit and a solar energy conversion device. In addition to a traditional PV system, a High Concentrator Photovoltaic (HCPV) device, the design of which is suitable for building integration application, was also modelled and embedded in the hybrid system. The work identifies the optimal management strategies for the hybrid renewable system in an effort to minimise the primary energy usage, the carbon dioxide emissions and the operational costs for variable electricity prices that result from the day-ahead electricity market. An “ad hoc” model describes the performance of the HCPV module, PV and Internal Combustion Engine, whilst the other units were simulated based on their main characteristic parameters. The developed algorithm was applied to three different building typologies. The results indicate that the best configuration is the hybrid renewable system with PV, which can provide a yearly primary energy reduction of between 20% and 30% compared to separate production. The hybrid renewable system with HCPV becomes competitive with the PV technology when the level of solar radiation is high. - Highlights: • The paper addresses a hybrid renewable system that consists of a micro-CCHP unit and a solar energy conversion device. • Both PV and High Concentrator Photovoltaic (HCPV) systems have been modelled and embedded in the hybrid system. • The work identifies the optimal management strategies for variable electricity prices. • Hybrid renewable systems provide a yearly primary energy reduction of between 20% and 30% compared to separate production. • When the level of solar radiation is high, HCPV becomes competitive with the PV technology

Optimal pricing of transmission and distribution services in electricity supply

International Nuclear Information System (INIS)

Farmer, E.D.; Cory, B.J.; Perera, B.L.P.P.

1995-01-01

A new strategy for the separate pricing of transmission and distribution services in electricity supply is formulated and evaluated. The proposed methodology is a multivariate transmission generalisation of the method of peak load pricing previously applied to the optimal time-of-use pricing of generation on a power system with diverse generation technologies and with elastic demand. The method allocates both capacity and operational costs on a time-of-use basis, in an optimal manner, that avoids cross-subsidisation both between differing supply system participants and differing times of usage. The method is shown to promote the optimal development of the transmission, distribution or interconnecting systems, rewarding justified investments in transmission capacity and discouraging overinvestment. It also leads to appropriate returns on invested capital without significant 'revenue reconciliation'. This contrasts with SRMC pricing as is shown by a comparative revenue evaluation. It is concluded that the method has wide potential application in electricity supply. (author)

Investments and price formation in a liberalized electric power market. Appendices

International Nuclear Information System (INIS)

Morthorst, P.E.

2005-06-01

How will the electric power prices in the Nordic electric power market develop if the generation capacity in the coming 10 to 15 years is increased considerably? And what are the conditions for investors to initiate new investments in power plants? Briefly speaking - these are the issues for the project that is reported in this report. The basis for the project has been the Nordic electric power market model and its capability to handle the future extension of the necessary generating capacity. The main issue in the project has been a quantitative analysis of what the prices in the Nordic electric power market will be in the future, depending on the size of new investments in the power generating capacity. The appendix volume of the project report contains detailed descriptions of the three models that are used: the Balmorel model, the investment model, and the MARS model. The Balmorel model is a partial equilibrium model that describes a coherent, international electric power system and combined heat and power system. The model was developed in 2000 through international co-operation with the aim to have a model for analysing international aspects in the Baltic area. The investment model analyses and models the investment decisions in a liberalized Nordic electric power market. It is an exogenous model constructed outside the Balmorel model but uses the price pictures from the Balmorel model as input. MARS (MARket Simulation) is Eltra's (a Danish electric power transmission company) market model for simulating prices, production, demand and exchanges in the power market. The model covers the Nordic countries (Nord Pool) and Northern Germany. (LN)

Australian retail electricity prices: Can we avoid repeating the rising trend of the past?

International Nuclear Information System (INIS)

Graham, Paul W.; Brinsmead, Thomas; Hatfield-Dodds, Steve

2015-01-01

After a stable or declining real trend that persisted for more than half a century, Australian retail electricity prices have experienced a substantial increase, in real terms, since 2007. This has mainly been driven by increases in the cost of electricity distribution and to a lesser degree in the cost of electricity generation. Reducing greenhouse gas emissions, which is a bipartisan political goal in Australia, will likely deliver further increases in generation costs due to the expected higher cost of low emission technology. Participating in global negotiations on emission reduction targets and designing efficient policy mechanisms have been a major focus of governments over the last several decades. In contrast, managing distribution system costs has received less attention. While there were a number of factors which drove historical increases in distribution costs, management of peak demand growth could help contain or reduce the extent to which consumers, particularly households, experience further increases in distribution costs. The paper demonstrates how different combinations of carbon price and peak demand scenarios could impact future residential and industrial retail electricity prices to 2050 and discusses some behavioural and technological solutions to manage peak demand and potential barriers to their deployment. - Highlights: • We identify the causes of the increase in Australian retail electricity prices. • We identify two sources of likely further cost pressures on electricity prices. • We estimate future retail electricity prices under five scenarios. • We discuss barriers and solutions to controlling peak demand growth.

Practical operation strategies for pumped hydroelectric energy storage (PHES) utilising electricity price arbitrage

DEFF Research Database (Denmark)

Connolly, David; Lund, Henrik; Finn, P.

2011-01-01

In this paper, three practical operation strategies (24Optimal, 24Prognostic, and 24Hsitrocial) are compared to the optimum profit feasible for a PHES facility with a 360 MW pump, 300 MW turbine, and a 2 GWh storage utilising price arbitrage on 13 electricity spot markets. The results indicate...... that almost all (not, vert, similar97%) of the profits can be obtained by a PHES facility when it is optimised using the 24Optimal strategy developed, which optimises the energy storage based on the day-ahead electricity prices. However, to maximise profits with the 24Optimal strategy, the day......-ahead electricity prices must be the actual prices which the PHES facility is charged or the PHES operator must have very accurate price predictions. Otherwise, the predicted profit could be significantly reduced and even become a loss. Finally, using the 24Optimal strategy, the PHES profit can surpass the annual...

The welfare effects of different pricing schemes for electricity distribution in Finland

International Nuclear Information System (INIS)

Kopsakangas-Savolainen, Maria

2004-01-01

The main components of electricity prices can be divided into the wholesale price, the price of network operations and taxes. Even if the wholesale price is determined efficiently, total welfare can be significantly disturbed if network operations are priced inefficiently. In this study, we calculate network prices based on four alternative methods. These are marginal cost pricing, Ramsey pricing, FDC-pricing and optimal two-part tariffs. The welfare effects on the prevailing pricing system are compared. We show that potentially significant improvements in welfare can be achieved by using marginal cost prices or optimal two-part tariffs. Also Ramsey pricing indicates that prevailing prices are inefficient

The welfare effects of different pricing schemes for electricity distribution in Finland

International Nuclear Information System (INIS)

Kopsakangas-Savolainen, Maria

2004-01-01

The main components of electricity prices can be divided into the wholesale price, the price of network operations and taxes. Even if the wholesale price is determined efficiently, total welfare can be significantly disturbed if network operations are priced inefficiently. In this study, we calculate network prices based on four alternative methods. These are marginal cost pricing, Ramsey pricing, FDC-pricing and optimal two-part tariffs. The welfare effects on the prevailing pricing system are compared. We show that potentially significant improvements in welfare can be achieved by using marginal cost prices or optimal two-part tariffs. Also Ramsey pricing indicates that prevailing prices are inefficient. (Author)

The Effect of Wind Power on Electricity Prices in Denmark

DEFF Research Database (Denmark)

Jonsson, Tryggvi; Madsen, Henrik

This report is the result of a special course taken by the author at IMM DTU under the guidance of professor Henrik Madsen. The aim of the project is to analyze the influence wind energy has on the electricity spot price in Western Denmark and investigate how information about wind power production...... can be used to model the electricity spot price. Various model types were tried, giving very different performance. Here, only the models that performed best are discussed in order to keep focus on the projects goal....

Residential implementation of critical-peak pricing of electricity

International Nuclear Information System (INIS)

Herter, Karen

2007-01-01

This paper investigates how critical-peak pricing (CPP) affects households with different usage and income levels, with the goal of informing policy makers who are considering the implementation of CPP tariffs in the residential sector. Using a subset of data from the California Statewide Pricing Pilot of 2003-04, average load change during summer events, annual percent bill change, and post-experiment satisfaction ratings are calculated across six customer segments, categorized by historical usage and income levels. Findings show that high-use customers respond significantly more in kW reduction than do low-use customers, while low-use customers save significantly more in percentage reduction of annual electricity bills than do high-use customers-results that challenge the strategy of targeting only high-use customers for CPP tariffs. Across income levels, average load and bill changes were statistically indistinguishable, as were satisfaction rates-results that are compatible with a strategy of full-scale implementation of CPP rates in the residential sector. Finally, the high-use customers earning less than $50,000 annually were the most likely of the groups to see bill increases-about 5% saw bill increases of 10% or more-suggesting that any residential CPP implementation might consider targeting this customer group for increased energy efficiency efforts

Price forecasting of day-ahead electricity markets using a hybrid forecast method

International Nuclear Information System (INIS)

Shafie-khah, M.; Moghaddam, M. Parsa; Sheikh-El-Eslami, M.K.

2011-01-01

Research highlights: → A hybrid method is proposed to forecast the day-ahead prices in electricity market. → The method combines Wavelet-ARIMA and RBFN network models. → PSO method is applied to obtain optimum RBFN structure for avoiding over fitting. → One of the merits of the proposed method is lower need to the input data. → The proposed method has more accurate behavior in compare with previous methods. -- Abstract: Energy price forecasting in a competitive electricity market is crucial for the market participants in planning their operations and managing their risk, and it is also the key information in the economic optimization of the electric power industry. However, price series usually have a complex behavior due to their nonlinearity, nonstationarity, and time variancy. In this paper, a novel hybrid method to forecast day-ahead electricity price is proposed. This hybrid method is based on wavelet transform, Auto-Regressive Integrated Moving Average (ARIMA) models and Radial Basis Function Neural Networks (RBFN). The wavelet transform provides a set of better-behaved constitutive series than price series for prediction. ARIMA model is used to generate a linear forecast, and then RBFN is developed as a tool for nonlinear pattern recognition to correct the estimation error in wavelet-ARIMA forecast. Particle Swarm Optimization (PSO) is used to optimize the network structure which makes the RBFN be adapted to the specified training set, reducing computation complexity and avoiding overfitting. The proposed method is examined on the electricity market of mainland Spain and the results are compared with some of the most recent price forecast methods. The results show that the proposed hybrid method could provide a considerable improvement for the forecasting accuracy.

Price forecasting of day-ahead electricity markets using a hybrid forecast method

Energy Technology Data Exchange (ETDEWEB)

Shafie-khah, M., E-mail: miadreza@gmail.co [Tarbiat Modares University, Tehran (Iran, Islamic Republic of); Moghaddam, M. Parsa, E-mail: parsa@modares.ac.i [Tarbiat Modares University, Tehran (Iran, Islamic Republic of); Sheikh-El-Eslami, M.K., E-mail: aleslam@modares.ac.i [Tarbiat Modares University, Tehran (Iran, Islamic Republic of)

2011-05-15

Research highlights: {yields} A hybrid method is proposed to forecast the day-ahead prices in electricity market. {yields} The method combines Wavelet-ARIMA and RBFN network models. {yields} PSO method is applied to obtain optimum RBFN structure for avoiding over fitting. {yields} One of the merits of the proposed method is lower need to the input data. {yields} The proposed method has more accurate behavior in compare with previous methods. -- Abstract: Energy price forecasting in a competitive electricity market is crucial for the market participants in planning their operations and managing their risk, and it is also the key information in the economic optimization of the electric power industry. However, price series usually have a complex behavior due to their nonlinearity, nonstationarity, and time variancy. In this paper, a novel hybrid method to forecast day-ahead electricity price is proposed. This hybrid method is based on wavelet transform, Auto-Regressive Integrated Moving Average (ARIMA) models and Radial Basis Function Neural Networks (RBFN). The wavelet transform provides a set of better-behaved constitutive series than price series for prediction. ARIMA model is used to generate a linear forecast, and then RBFN is developed as a tool for nonlinear pattern recognition to correct the estimation error in wavelet-ARIMA forecast. Particle Swarm Optimization (PSO) is used to optimize the network structure which makes the RBFN be adapted to the specified training set, reducing computation complexity and avoiding overfitting. The proposed method is examined on the electricity market of mainland Spain and the results are compared with some of the most recent price forecast methods. The results show that the proposed hybrid method could provide a considerable improvement for the forecasting accuracy.

Lower electricity prices and greenhouse gas emissions due to rooftop solar: empirical results for Massachusetts

International Nuclear Information System (INIS)

Kaufmann, Robert K.; Vaid, Devina

2016-01-01

Monthly and hourly correlations among photovoltaic (PV) capacity utilization, electricity prices, electricity consumption, and the thermal efficiency of power plants in Massachusetts reduce electricity prices and carbon emissions beyond average calculations. PV utilization rates are highest when the thermal efficiencies of natural gas fired power plants are lowest, which reduces emissions of CO 2 and CH 4 by 0.3% relative to the annual average emission rate. There is a positive correlation between PV utilization rates and electricity prices, which raises the implied price of PV electricity by up to 10% relative to the annual average price, such that the average MWh reduces electricity prices by $0.26–$1.86 per MWh. These price reductions save Massachusetts rate-payers $184 million between 2010 and 2012. The current and net present values of these savings are greater than the cost of solar renewable energy credits which is the policy instrument that is used to accelerate the installation of PV capacity. Together, these results suggest that rooftop PV is an economically viable source of power in Massachusetts even though it has not reached socket parity. - Highlights: •Implied price of PV up to 10% greater than the annual average price. •PV saves Massachusetts rate-payers $184 million in 2010–2012. •Annual savings are greater than the cost of solar renewable energy credits. •Savings rise longer lifetime of PV systems and pay period for SREC's shortened. •PV reduces emissions of CO 2 and CH 4 by 0.3% relative to the annual average.

Transmission prices in the electric system. Technical constraints and economic efficiency

International Nuclear Information System (INIS)

Polidori, P.

1999-01-01

This article analyses the two main models at the core of today's theoretical discussion on transmission pricing in electricity sectors under competition. The first aim of the paper is showing how technical constraints that characterise transmission systems may affect energy production and transmission and therefore the definition of the price system for using the electric grid. The second aim of the paper is showing how it is possible to suggest solutions, although not free from limitations, that can be used for an efficient management of electric systems characterised by generation and consumption sectors under competition [it

Optimal Electricity Charge Strategy Based on Price Elasticity of Demand for Users

Science.gov (United States)

Li, Xin; Xu, Daidai; Zang, Chuanzhi

The price elasticity is very important for the prediction of electricity demand. This paper mainly establishes the price elasticity coefficient for electricity in single period and inter-temporal. Then, a charging strategy is established based on these coefficients. To evaluate the strategy proposed, simulations of the two elastic coefficients are carried out based on the history data of a certain region.

Forecasting Electricity Market Price for End Users in EU28 until 2020—Main Factors of Influence

Directory of Open Access Journals (Sweden)

Simon Pezzutto

2018-06-01

Full Text Available The scope of the present investigation is to provide a description of final electricity prices development in the context of deregulated electricity markets in EU28, up to 2020. We introduce a new methodology to predict long-term electricity market prices consisting of two parts: (1 a self-developed form of Porter’s five forces analysis (PFFA determining that electricity markets are characterized by a fairly steady price increase. Dominant driving factors come out to be: (i uncertainty of future electricity prices; (ii regulatory complexity; and (iii generation overcapacities. Similar conclusions derive from (2 a self-developed form of multiple-criteria decision analysis (MCDA. In this case, we find that the electricity market particularly depends on (i market liberalization and (ii the European Union (EU’s economy growth. The applied methodologies provide a novel contribution in forecasting electricity price trends, by analyzing the sentiments, expectations, and knowledge of industry experts, through an assessment of factors influencing the market price and goals of key market participants. An extensive survey was conducted, interviewing experts all over Europe showed that the electricity market is subject to a future slight price increase.

Cross-border integration in the European electricity market. Evidence from the pricing behavior of Norwegian and Swiss exporters

International Nuclear Information System (INIS)

Balaguer, Jacint

2011-01-01

This paper examines the electricity market integration process in two European areas based on the pricing behavior of Norwegian and Swiss exporters. The aim is to gain evidence for the period after the adoption of the 'Second Legislative Package' (2003). The pricing behavior of Norwegian exporters indicates that the wholesale markets for Denmark and Sweden are highly integrated. Moreover, results are fully compatible with the existence of a very competitive marketplace for electricity. This clearly contrasts with the evidence provided by Swiss exporters. In this last case, analysis revealed differences in pricing-to-market behavior between Italy, France and Germany, which indicates that exporters take advantage of international market segmentation and divergences between market structures. This outcome provides a reasonable explanation as to why price differences between countries cannot be fully attributed to transmission costs, as has been claimed in previous research. We also found cross-country convergence in levels of markups and in pricing-to-market behavior of the Swiss exporters for the first part of the period that was analyzed. The evidence is fully consistent with an initial impulse toward market integration originated by reforms implemented at the beginning of the last decade. - Highlights: → We exploit a model based on pricing-to-market behavior. → Price discrimination by Swiss exporters is found. → Nordic electricity markets are found to be already highly integrated. → Market integration was recently improved in continental area. → Results are consistent with reforms under the 'Second Legislative Package'.

Cross-border integration in the European electricity market. Evidence from the pricing behavior of Norwegian and Swiss exporters

Energy Technology Data Exchange (ETDEWEB)

Balaguer, Jacint, E-mail: jacint.balaguer@eco.uji.es [Department of Economics, Universitat Jaume I, 12071 Castellon (Spain)

2011-09-15

This paper examines the electricity market integration process in two European areas based on the pricing behavior of Norwegian and Swiss exporters. The aim is to gain evidence for the period after the adoption of the 'Second Legislative Package' (2003). The pricing behavior of Norwegian exporters indicates that the wholesale markets for Denmark and Sweden are highly integrated. Moreover, results are fully compatible with the existence of a very competitive marketplace for electricity. This clearly contrasts with the evidence provided by Swiss exporters. In this last case, analysis revealed differences in pricing-to-market behavior between Italy, France and Germany, which indicates that exporters take advantage of international market segmentation and divergences between market structures. This outcome provides a reasonable explanation as to why price differences between countries cannot be fully attributed to transmission costs, as has been claimed in previous research. We also found cross-country convergence in levels of markups and in pricing-to-market behavior of the Swiss exporters for the first part of the period that was analyzed. The evidence is fully consistent with an initial impulse toward market integration originated by reforms implemented at the beginning of the last decade. - Highlights: > We exploit a model based on pricing-to-market behavior. > Price discrimination by Swiss exporters is found. > Nordic electricity markets are found to be already highly integrated. > Market integration was recently improved in continental area. > Results are consistent with reforms under the 'Second Legislative Package'.

Trend of electricity prices in privatised industry: UK compared to other european countries 1985-1994

International Nuclear Information System (INIS)

Lorenzoni, A.

1995-01-01

Great efforts are devoted nowadays in many countries to reform the electric power system in order to achieve higher efficiency. The model under consideration is, more or less overtly, the new Electricity Supply Industry (ESI) in England and Wales which first transformed the vertically integrated state monopoly and introduced as the same time competition in electricity generation and supply. This paper analyses the trend of the final prices in UK during the ESI structural transformation between 1985 and 1994, since the final price of electricity is acknowledge as a good indicator of the performance of an ESI, and highlights the impact of privatisation on the different classes of consumers. It is investigated the evolution of the ratio between regulated-prices and free-market prices to further understand who profited from the new structure of the industry; the study continues with a comparison among the prices in UK, Italy and France. The analysis applies first to the nominal prices, and secondly to the deflated prices, in order to compare different years at constant purchase power

Legal fixing of the electricity market price; Die juristische Bestimmung des Marktpreises fuer Strom

Energy Technology Data Exchange (ETDEWEB)

Lindner, Thomas

2011-07-01

The book attempts to analyze the problems of fixing electricity rates by law and to develop an approach for determining the market price for electricity. The focus is on industrial customers as this is the sector in which the market price is of practical relevance. Private customers are gone into if necessary, as is the stock market price. The main problem in determining the free market price is the very fact that it is free, i.e. in contrast to the stock market price it is not fixed and published officially. The book therefore analyzes the abstract preconditions for determining the free market price. (orig./RHM)

Analysis of relationships between hourly electricity price and load in deregulated real-time power markets

International Nuclear Information System (INIS)

Lo, K.L.; Wu, Y.K.

2004-01-01

Risk management in the electric power industry involves measuring the risk for all instruments owned by a company. The value of many of these instruments depends directly on electricity prices. In theory, the wholesale price in a real-time market should reflect the short-run marginal cost. However, most markets are not perfectly competitive, therefore by understanding the degree of correlation between price and physical drivers, electric traders and consumers can manage their risk more effectively and efficiently. Market data from two power-pool architectures, both pre-2003 ISO-NE and Australia's NEM, have been studied. The dynamic character of electricity price is mean-reverting, and consists of intra-day and weekly variations, seasonal fluctuations, and instant jumps. Parts of them are affected by load demands. Hourly signals on both price and load are divided into deterministic and random components with a discrete Fourier transform algorithm. Next, the real-time price-load relationship for periodic and random signals is examined. In addition, time-varying volatility models are constructed on random price and random load with the GARCH model, and the correlation between them analysed. Volatility plays a critical role on evaluating option pricing and risk management. (author)

Understanding the determinants of electricity prices and the impact of the German Nuclear Moratorium in 2011

International Nuclear Information System (INIS)

Thoenes, Stefan

2011-01-01

This paper shows how the effect of fuel prices varies with the level of electricity demand. It analyzes the relationship between daily prices of electricity, natural gas and carbon emission allowances with a vector error correction model and a semiparametric varying smooth coefficient model. The results indicate that the electricity price adapts to fuel price changes in a long-term cointegration relationship. Different electricity generation technologies have distinct fuel price dependencies, which allows estimating the structure of the power plant portfolio by exploiting market prices. The semiparametric model indicates a technology switch from coal to gas at roughly 85% of maximum demand. It is used to analyze the market impact of the nuclear moratorium by the German Government in March 2011. Futures prices show that the market efficiently accounts for the suspended capacity and expects that several nuclear plants will not be switched on after the moratorium.

Real-time electricity pricing in a deregulated environment using artificial intelligence

Energy Technology Data Exchange (ETDEWEB)

Dondo, M.G.

1998-12-31

The challenge of implementing real-time pricing of electricity was discussed. Several electric utilities want to incorporate real-time pricing into their rate policies. Conventional programming methods are not fast enough to process and distribute information in real time. Therefore, a new method that would match the current advances in communication speeds is needed. Also, conventional programming methods do not incorporate the uncertainties that are inherent in the lives of humans. Therefore, it is necessary to incorporate this fuzziness into the model. This study showed that the elements of speed and uncertainties can be readily incorporated into the determination of spot-pricing based electricity rates. A unique computational intelligence model was designed which consists of a feedforward neural network based on back-propagation training and a fuzzy logic model. The work has been demonstrated on the IEEE test systems and the Nova Scotia Power Corporation`s system.

Electricity spot price forecasting in free power market

International Nuclear Information System (INIS)

Lilleberg, J.; Laitinen, E.K.

1998-01-01

Deregulation has brought many changes to the electricity market. Freedom of choice has been granted to both the consumers and the utilities. Consumers may choose the seller of their energy. Utilities have a wider array of sources to acquire their electricity from. Also the types of sales contracts used are changing to fill the needs of this new situation. The consumers' right to choose has introduced a new risk uncertainty of volume, which was not true during the times of monopoly. As sold volume is unsure and the energy is not sold on same terms as it is bought, a price risk has to be dealt with also. The electric utility has to realize this, select a risk level that suits its business strategy and optimize its actions according to the selected risk level. The number of participants will grow as the electricity market integrates into a common market for Scandinavia and even Europe. Big customers are also taking a more active role in the market, further increasing the number of participants. This makes old bilateral arrangements outdated. New tools are needed to control the new business environment. The goal of this project has been to develop a theoretical model to predict the price in the Finnish electricity exchange, El-Ex Oy. An extensive literature review was conducted in order to (1) examine the solutions in deregulation of electricity markets in other countries, esp. in Norway and UK, (2) find similarities and differences in electricity exchange and exchanges generally and (3) find major sources of problems and inefficiency in the market

Electricity spot price forecasting in free power market

Energy Technology Data Exchange (ETDEWEB)

Lilleberg, J; Laitinen, E K [Vaasa Univ. (Finland)

1998-08-01

Deregulation has brought many changes to the electricity market. Freedom of choice has been granted to both the consumers and the utilities. Consumers may choose the seller of their energy. Utilities have a wider array of sources to acquire their electricity from. Also the types of sales contracts used are changing to fill the needs of this new situation. The consumers` right to choose has introduced a new risk uncertainty of volume, which was not true during the times of monopoly. As sold volume is unsure and the energy is not sold on same terms as it is bought, a price risk has to be dealt with also. The electric utility has to realize this, select a risk level that suits its business strategy and optimize its actions according to the selected risk level. The number of participants will grow as the electricity market integrates into a common market for Scandinavia and even Europe. Big customers are also taking a more active role in the market, further increasing the number of participants. This makes old bilateral arrangements outdated. New tools are needed to control the new business environment. The goal of this project has been to develop a theoretical model to predict the price in the Finnish electricity exchange, El-Ex Oy. An extensive literature review was conducted in order to (1) examine the solutions in deregulation of electricity markets in other countries, esp. in Norway and UK, (2) find similarities and differences in electricity exchange and exchanges generally and (3) find major sources of problems and inefficiency in the market

Pricing of reserves. Valuing system reserve capacity against spot prices in electricity markets

International Nuclear Information System (INIS)

Just, Sebastian; Weber, Christoph

2008-01-01

This paper models the interdependencies between markets for secondary reserve capacity and spot electricity to derive the pricing of reserves under equilibrium conditions. Starting with the indifference condition between offering in both markets, the reservation price is derived from the opportunity cost consideration and the unit commitment conditions in a fundamental interrelated market framework. The reserve market examined compares widely to the German market for secondary reserves, but the general approach may also be used to investigate other reserve markets. The approach explores and formalizes the influence of reserve capacity on the spot market supply function. A numerical solution procedure is provided to this non-trivial case of market interaction. The model is used to estimate the expected reservation price development over the last years in Germany. (author)

Neural networks approach to forecast several hour ahead electricity prices and loads in deregulated market

Energy Technology Data Exchange (ETDEWEB)

Mandal, Paras; Senjyu, Tomonobu [Department of Electrical and Electronics, University of the Ryukyus, 1 Senbaru, Nagakami Nishihara, Okinawa 903-0213 (Japan); Funabashi, Toshihisa [Meidensha Corporation, Tokyo 103-8515 (Japan)

2006-09-15

In daily power markets, forecasting electricity prices and loads are the most essential task and the basis for any decision making. An approach to predict the market behaviors is to use the historical prices, loads and other required information to forecast the future prices and loads. This paper introduces an approach for several hour ahead (1-6h) electricity price and load forecasting using an artificial intelligence method, such as a neural network model, which uses publicly available data from the NEMMCO web site to forecast electricity prices and loads for the Victorian electricity market. An approach of selection of similar days is proposed according to which the load and price curves are forecasted by using the information of the days being similar to that of the forecast day. A Euclidean norm with weighted factors is used for the selection of the similar days. Two different ANN models, one for one to six hour ahead load forecasting and another for one to six hour ahead price forecasting have been proposed. The MAPE (mean absolute percentage error) results show a clear increasing trend with the increase in hour ahead load and price forecasting. The sample average of MAPEs for one hour ahead price forecasts is 9.75%. This figure increases to only 20.03% for six hour ahead predictions. Similarly, the one to six hour ahead load forecast errors (MAPE) range from 0.56% to 1.30% only. MAPE results show that several hour ahead electricity prices and loads in the deregulated Victorian market can be forecasted with reasonable accuracy. (author)

Neural networks approach to forecast several hour ahead electricity prices and loads in deregulated market

International Nuclear Information System (INIS)

Mandal, Paras; Senjyu, Tomonobu; Funabashi, Toshihisa

2006-01-01

In daily power markets, forecasting electricity prices and loads are the most essential task and the basis for any decision making. An approach to predict the market behaviors is to use the historical prices, loads and other required information to forecast the future prices and loads. This paper introduces an approach for several hour ahead (1-6 h) electricity price and load forecasting using an artificial intelligence method, such as a neural network model, which uses publicly available data from the NEMMCO web site to forecast electricity prices and loads for the Victorian electricity market. An approach of selection of similar days is proposed according to which the load and price curves are forecasted by using the information of the days being similar to that of the forecast day. A Euclidean norm with weighted factors is used for the selection of the similar days. Two different ANN models, one for one to six hour ahead load forecasting and another for one to six hour ahead price forecasting have been proposed. The MAPE (mean absolute percentage error) results show a clear increasing trend with the increase in hour ahead load and price forecasting. The sample average of MAPEs for one hour ahead price forecasts is 9.75%. This figure increases to only 20.03% for six hour ahead predictions. Similarly, the one to six hour ahead load forecast errors (MAPE) range from 0.56% to 1.30% only. MAPE results show that several hour ahead electricity prices and loads in the deregulated Victorian market can be forecasted with reasonable accuracy

The Impact of Emissions Trading on the Price of Electricity in Nord Pool : Market Power and Price Determination in the Nordic Electricity Market

OpenAIRE

Oranen, Anna

2006-01-01

The objective of this thesis is to find out how dominant firms in a liberalised electricity market will react when they face an increase in the level of costs due to emissions trading, and how this will effect the price of electricity. The Nordic electricity market is chosen as the setting in which to examine the question, since recent studies on the subject suggest that interaction between electricity markets and emissions trading is very much dependent on conditions specific to each market ...

An empirical comparison of alternate regime-switching models for electricity spot prices

Energy Technology Data Exchange (ETDEWEB)

Janczura, Joanna [Hugo Steinhaus Center, Institute of Mathematics and Computer Science, Wroclaw University of Technology, 50-370 Wroclaw (Poland); Weron, Rafal [Institute of Organization and Management, Wroclaw University of Technology, 50-370 Wroclaw (Poland)

2010-09-15

One of the most profound features of electricity spot prices are the price spikes. Markov regime-switching (MRS) models seem to be a natural candidate for modeling this spiky behavior. However, in the studies published so far, the goodness-of-fit of the proposed models has not been a major focus. While most of the models were elegant, their fit to empirical data has either been not examined thoroughly or the signs of a bad fit ignored. With this paper we want to fill the gap. We calibrate and test a range of MRS models in an attempt to find parsimonious specifications that not only address the main characteristics of electricity prices but are statistically sound as well. We find that the best structure is that of an independent spike 3-regime model with time-varying transition probabilities, heteroscedastic diffusion-type base regime dynamics and shifted spike regime distributions. Not only does it allow for a seasonal spike intensity throughout the year and consecutive spikes or price drops, which is consistent with market observations, but also exhibits the 'inverse leverage effect' reported in the literature for spot electricity prices. (author)

An empirical comparison of alternate regime-switching models for electricity spot prices