Capacity commitment and price volatility in a competitive electricity market

Intermittently renewable energy, optimal capacity mix and prices in a deregulated electricity market

“…Each firm builds generating capacity and then uses it to generate and sell electricity on each day of an operation horizon of T days (e.g., T¼365 for a 1-year horizon). 6 Let P t and Q t denote the electricity price and output on day t. Following Wolfram (1999) and Tishler et al (2008), daily electricity demand is…”

“…In the second stage, after daily demand and sunshinedetermined PV availability become known, each producer selects its daily electricity production, thereby determining the equilibrium market prices. Like many other studies of the electricity sector, we employ the Cournot conjecture to determine equilibrium quantities and prices in the second stage of the game, where electricity is sold simultaneously by all producers to meet market demand (Carpio and Pereira, 2007;Borenstein and Bushnell, 1999;Green, 1996Green, , 2004Newbery, 1998;Tishler and Woo, 2006;Puller, 2007;Smeers, 2005, 2007;Tishler et al, 2008;Bushnell et al, 2008). We show that the optimal solution is very sensitive to PV's sunshine-dependent availability and capital cost.…”

Modeling electricity markets as two-stage capacity constrained price competition games under uncertainty

“…For example in Greece, where both a price 15 It is interesting to note that if there were two technologies ݅, ݆ with ݉ܿ < ݉ܿ and a regulator set different price caps on offers, so that ݉ܿ < ‫ݎ‬ < ݉ܿ , then the market could be treated as two separate markets, where the demand of the "high marginal cost market" would correspond to the demand exceeding the aggregate capacity of technology i. 16 The cost c here refers to the annual cost.…”

“…then the corresponding minimum price cap intervals for the CCGT and OCGT are ሾ82.22 ,126.66ሿ and ሾ350 ,1100ሿ respectively. The big difference between the range of values of the two price caps implies that the best policy, under the examined pay-as-bid framework, would be to implement different price caps on the offers of each generation unit technology, instead of a uniform market price cap 15 .…”

The Chinese electricity industry: supply capacity and its determinants with reference to OECD countries

“…Furthermore, Wen, Wu and Ni (2004) appointed that "the prices of electricity to reflect short-term supply and demand status will create market signal for a proper capacity expansion". Tishler, Milstein, Woo (2008) investigated "the interdependence among equilibrium capacity, market price level, market price volatility, and supply shortage due to the price capping". With the Israel data, they argued that price capping would lead to power shortages, "because the tightening of the price cap induces an increase in the quantity demanded which is higher than the increase in the optimal capacity".…”