Optimal Spot Pricing: Practice and Theory

Caramanis,; Bohn, Roger E.; Schweppe,

doi:10.1109/mper.1982.5519479

Cited by 32 publications

(38 citation statements)

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“…Nevertheless, the social cost of capacity shortages is so high that a thorough analysis of the issue is available. Caramanis et al show that under ideal conditions, electricity spot markets provided efficient outcomes in both the short and the long term (Caramanis, 1982;Caramanis et al, 1982). This theory still stands; the question is whether it applies in practice or whether real market conditions deviate too much from the ideal situation.…”

Section: Introductionmentioning

confidence: 99%

The Question of Generation Adequacy in Liberalised Electricity Markets

Vries

Hakvoort

2004

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in The Question of Generation Adequacy in Liberalised Electricity Markets SummaryThis paper presents an overview of the reasons why unregulated markets for the production of electricity cannot be expected to invest sufficiently in generation capacity on a continuous basis. Although it can be shown that periodic price spikes should provide generation companies with sufficient investment incentives in theory, there are a number of probable causes of market failure. A likely result is the development of investment cycles that may affect the adequacy of capacity. The experience in California shows the great social costs associated with an episode of scarce generation capacity. Another disadvantage is that generation companies can manipulate price spikes. This would result in large transfers of income from consumers to producers and reduce the operational reliability of electricity supply during these price spikes. We end this paper by outlining several methods that have been proposed to stabilise the market, which provide better incentives to generation companies and consumers alike.

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Section: Introductionmentioning

confidence: 99%

The Question of Generation Adequacy in Liberalised Electricity Markets

Vries

Hakvoort

2004

SSRN Journal

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“…The RTP principle was initially proposed by Caramanis et al in the 1980s [5]. It has widely been recognized as one of the promising solutions more effective in making both customers and suppliers satisfied during peak reduction.…”

Section: Background and Motivation In 2007 The United Statesmentioning

confidence: 99%

Real-Time Pricing for Demand Response in Smart Grid Based on Alternating Direction Method of Multipliers

Zhu

Gao

Hou

2018

Mathematical Problems in Engineering

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The real-time pricing (RTP) scheme is an ideal method to adjust the power balance between supply and demand in smart grid systems. This scheme has a profound impact on users' behavior, system operation, and overall grid management in the electricity industry. In this research, we conduct an extended discussion of a RTP optimization model and give a theoretical analysis of the existence and uniqueness of the Lagrangian multiplier. A distributed optimization method based on the alternating direction method of multipliers (ADMM) algorithm with Gaussian back substitution (GBS) is proposed in this study. On the one hand, the proposed algorithm takes abundant advantage of the separability among variables in the model. On the other hand, the proposed algorithm can not only speed up the convergence rate to enhance the efficiency of computing, but also overcome the deficiency of the distributed dual subgradient algorithm, the possibility of nonconvergence in the iteration process. In addition, we give the theoretical proof of the convergence of the proposed algorithm. Furthermore, the interdependent relationship between variables has been discussed in depth during numerical simulations in the study. Compared with the dual subgradient method, the simulation results validate that the proposed algorithm has a higher convergence speed and better implementation effect.

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“…Hence, due to the fact that both activities are in different hands (those of the transmission system operator and generation companies, respectively), achieving their efficient functioning requires that coordinating signals are sent to generators (and market agents in general) so that they take into account the existence of the network in the operation and investment decisions they make. Marginal electricity pricing theory provides a satisfactory solution to the coordination of generation and transmission operation in the form of Locational Marginal Prices (LMPs), or nodal prices, see [1]. Thus, LMPs, and other coordinating signals based on them, like wheeling transmission charges, have been employed to achieve an efficient coordination of generation and transmission operation under imperfect competition both in the short term, or operation time frame, see [2] and [3], and when computing the development of generation and transmission, see [4] and [5].…”

Section: Setsmentioning

confidence: 99%