Modeling the impact of market interventions on the strategic evolution of electricity markets.

Bunn, Derek W.; Oliveira, Fernando S.

Abstract

This paper presents a large-scale computationally intensive model for understanding the dynamic strategic evolution of electricity-generating asset portfolios in response to various market interventions, and the consequent longer-term effects of such changes on market structure and prices. We formulate a multistage model involving a Cournot representation of the wholesale electricity market, the performance of which then determines plant trading between players and the co-evolution of market structure. An algorithm to model this game is presented. We apply this model to the full England and Wales system, as it was in 2000, and simulate the strategic responses to divestiture, capacity targets, and the two market mechanism variants of pool and bilateral market clearing.

Citation

BUNN, D.W. and OLIVEIRA, F.S. 2008. Modeling the impact of market interventions on the strategic evolution of electricity markets. Operations research [online], 56(5), pages 1116-1130. Available from: https://doi.org/10.1287/opre.1080.0565

• Journal Article Type: Article
• Acceptance Date: Sep 1, 2007
• Online Publication Date: Oct 1, 2008
• Publication Date: Oct 31, 2008
• Deposit Date: Oct 21, 2023
• Publicly Available Date: Nov 15, 2023
• Journal: Operations research
• Print ISSN: 0030-364X
• Electronic ISSN: 1526-5463
• Publisher: INFORMS
• Peer Reviewed: Peer Reviewed
• Volume: 56
• Issue: 5
• Pages: 1116-1130
• DOI: https://doi.org/10.1287/opre.1080.0565
• Keywords: Market modelling; Financial modelling; Electricity market
• Public URL: https://rgu-repository.worktribe.com/output/2114824