The restructuring of electricity systems can follow different paradigms that have different impacts. The objective of this paper is to show that Variational Inequalities Problems provide a natural tool for modeling electricity restructuring in a wide range of relevant situations. Besides being a convenient modeling tool, variational inequalities can also be used as an analytical instrument for assessing properties of different restructuring models. Last but not least, variational inequality models lend themselves to computation and hence to quantitative evaluations. Document type : Document de travail (Working Paper) Référence bibliographiqueDaxhelet, Olivier ; Smeers, Yves. Variational inequality models of restructured electricity systems.

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We present a computable model that encompasses several proposals of the "Florence Regulatory Forum" initiated by the European Commission to deal with cross-border trade. Specifically, the model imbeds both the access to the network and congestion issues analysed by the Forum. Access charges reflect the mechanism devised by the Forum, and congestion at the interconnection is managed through the coordinated auction mechanism recently suggested by the European association of Transmission System Operators. The model allows for various domestic regulations of the less competitive part of market, and different degrees of competition in the more competitive market. We illustrate this flexibility on a stylised but extensive numerical example with the view of showing that the model behaves properly, and identifying policy issues to be studied in a more realistic case study.

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