The EU regulation on cross-border trade of electricity: A two-stage equilibrium model

Daxhelet, Olivier; Smeers, Yves

doi:10.1016/j.ejor.2005.12.040

Cited by 35 publications

(15 citation statements)

References 2 publications

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“…Thereby, we will be able to explicitly include the trade-off between the benefits of additional transmission capacity and the consumer welfare loss due to the tariffs. This is similar to the work by Daxhelet and Smeers (2007), but extends it for network investment. …”

Section: Discussionsupporting

confidence: 61%

“…A similar research question was tackled by Daxhelet and Smeers (2007), albeit their focus lies on network usage tariffs: the authors compare several proposals discussed within the Florence Regulatory Forum and discuss the different implementations of supra-national coordination. They propose a two-stage model in which national regulators set network usage tariffs for generators (G-component) and consumers (or load, hence L-component) in their jurisdiction, aiming to maximize welfare (defined as consumer surplus, generator profits and congestion rent) in their zone.…”

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confidence: 99%

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National-Strategic Investment in European Power Transmission Capacity

Huppmann

Egerer

2014

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 May 7, 2014Abstract The transformation of the European energy system requires substantial investment in transmission capacity to facilitate cross-border trade and to efficiently integrate renewable energy sources. However, network planning in the EU is still mainly a national prerogative. In contrast to other studies aiming to identify the pan-European (continental) welfare-optimal transmission expansion, we investigate the impact of zonal planners deciding on network investment strategically, with the aim of maximizing the sum of consumer surplus, generator profits and congestion rents in their jurisdiction. This reflects the inadequacy of current mechanisms to compensate for welfare re-allocations across national boundaries arising from network upgrades.We propose a three-stage equilibrium model to describe the Nash game between zonal planners (i.e., national governments, regulators, or system operators), each taking into account the impact of network expansion on the electricity spot market and the resulting welfare effects on the constituents within her jurisdiction. Using a four-node sample network, we identify several Nash equilibria of the game between the zonal planners, and illustrate the failure to reach the first-best welfare expansion in the absence of an effective compensation mechanism.

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Section: Discussionsupporting

confidence: 61%

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confidence: 99%

National-Strategic Investment in European Power Transmission Capacity

Huppmann

Egerer

2014

SSRN Journal

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“…(2016) Examination of market power or implicit collusion Schuler (2001), Borenstein et al (2002), Bunn and Oliveira (2003), Bushnell (2003), Murphy and Smeers (2005), Bushnell et al (2008), Anderson and Cau (2009), Banal-Estañol and Micola (2009), Murphy and Smeers (2010), Cau (2011), Oh and, and Peura and Bunn (2015) Capacity expansion in electricity markets Murphy and Smeers (2005), , Bunn and Oliveira (2008), Murphy and Smeers (2010), Ehrenmann and Smeers (2011), Pineau et al (2011), Filomena et al (2014, Bunn and Oliveira (2016), and Oliveira and Costa (2018) Effect of transmission costs and constraints on market behavior Younes and Ilic (1999), Kattuman et al (2004), Daxhelet and Smeers (2007) (2002), Neame et al (2003), Pritchard and Zakeri (2003), Kian andCruz (2005), Triki et al (2005), Fleten and Kristoffersen (2007), Aparicio et al (2008), Beraldi et al (2008), Corchero and Heredia (2011), Kim and Powell (2011), Boomsma et al (2014), and Steeger and Rebennack (2017) Bidding behavior, auction design and implementation Mount (2001), Singer (2002, Schummer and Vohra (2003), Elmaghraby (2005), Hortacsu and Puller (2008), Meeus et al (2009), …”

Section: Definitions and Background Informationmentioning

confidence: 99%

Electric Power Industry: Operational and Public Policy Challenges and Opportunities

Parker

Tan

Kazan

2019

Production and Operations Management

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The electric power industry is undergoing dramatic change driven by rapid technological transformation, concern over climate change, and evolving market structures. As a result, there is a need for new models to help the industry better utilize resources in a time of increasing uncertainty and to help government policy makers better understand the impacts of their regulatory decisions. We provide a structured review of the operations research and management science literatures to describe the current operational and policy issues in the electric power industry, with a particular focus on issues surrounding electricity market design, renewable integration, effects of climate policy on electric power infrastructure, rise of electric powered vehicles, energy storage, and the growing interdependence between natural gas and electric power sectors. We identify the current research frontier and classify the existing research into clusters with respect to managerial issues addressed. We offer a forecast for where the electric power industry is going and describe some important public policy issues. Finally, we highlight research opportunities and discuss how the management science community can contribute by considering the interaction between operational considerations and electric power policy.

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“…Market Coupling clears energy and transmission in the day ahead with an "implicit auction" of transmission capacity [10], [22], and is followed by intraday trading and real-time balancing. Commonly, markets having smaller prices export to markets having higher prices, until a common price is reached or congestion occurs due to limited Available Transmission Capacities at the interconnections [6], [13], [30]. Congestion management remains a controversial issue in the restructured European electricity sector.…”

Section: The Market Modelmentioning

confidence: 99%

“…Congestion management remains a controversial issue in the restructured European electricity sector. Congestion occurs when the infrastructure constrains transactions, thereby influencing the long term evolution of generation and consumption [6]. Our network model is based on a virtual representation of the European area where each node coincides with a geographic 2 demand market containing one or more TSOs and is fully interconnected with other geographic demand markets.…”

Section: The Market Modelmentioning

confidence: 99%

Wind farm portfolio optimization under network capacity constraints

Cadre

Papavasiliou

Smeers

2015

European Journal of Operational Research

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In this article, we provide a new methodology for optimizing a portfolio of wind farms within a market environment, for two Market Designs (exogenous prices and endogenous prices). Our model is built on an agent based representation of suppliers and generators interacting in a certain number of geographic demand markets, organized as two tiered systems. Assuming rational expectation of the agents with respect to the outcome of the real-time market, suppliers take forward positions, which act as signals in the day-ahead market, to compensate for the uncertainty associated with supply and demand. Then, generators optimize their bilateral trades with the generators in the other markets. The Nash Equilibria resulting from this Signaling Game are characterized using Game Theory. The Markowitz Frontier, containing the set of efficient wind farm portfolios, is derived theoretically as a function of the number of wind farms and of their concentration. Finally, using a case study of France, Germany and Belgium, we simulate the Markowitz Frontier contour in the expected cost-risk plane.

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The EU regulation on cross-border trade of electricity: A two-stage equilibrium model

Cited by 35 publications

References 2 publications

National-Strategic Investment in European Power Transmission Capacity

National-Strategic Investment in European Power Transmission Capacity

Electric Power Industry: Operational and Public Policy Challenges and Opportunities

Wind farm portfolio optimization under network capacity constraints

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