Abstract:We propose to assess the influence of a number of events on the degree of competition in the Dutch electricity wholesale market over the period 2006-2011 through a decomposition method based on the Residual Supply Index. We distinguish regulatory market-integration events, firm-level events and changes in the level of residual demand.We conclude that market-integration measures to improve competition have been effective, but that the changes in residual demand appear to have been equally important.Firm-level e… Show more
“…This then gives the company a possibility to exercise market power at that hour. Usually 110 % is used as a threshold (Mulder and Schoonbeek, 2013). However, the RSI cannot alone determine whether market power is being exercised, only provide a condition for the possibility of market power.…”
Energy is a fascinating subject to study. Not only is the whole energy industry undergoing a historical transition, but the problems we face require knowledge in both technology, economics and social sciences, which makes them both interesting and demanding. I feel privileged to have been able to combine all these aspects in my studies and to be part of the energy transition that is going on in the world. To be able to combine these perspec-Thesis as well has been a cherry on top. I want to thank my supervisor, Professor Sanna Syri, for providing me the opportunity to study this interesting topic and letting me be part of the Energy Efficiency and Systems group at Aalto University. Thank you Sanna for your valuable comments and words of encouragement. I also want to thank my advisor Anahita Farsaei for all the tips and support along the way. Thank you Ana for sharing your knowledge about market power indices and making me question my calculations. All my other colleagues at Aalto deserve a thank you as well. Thank you, especially Ville, for helping me with the data for the Lerner index and thank you Tiia for all the discussions and great lunch company. As this thesis marks the end of my studies, I want to thank all of you that have made my years at Aalto and in Otaniemi both many and unforgettable. Without all the amazing people I have met, I would probably have graduated a lot quicker, but many life lessons and fun experiences shorter. After all, the courses can only teach you so much. So thank you Teknologföreningen for letting me bear responsibility and for being a home, thank you for all the Friday laughs and bubbles, the sorts of things that keep you going. Thank you Phux 15 for letting me be your Phuxivator and FTMK for making me Feel so welcome over the language barrier in Otaniemi. Thank you Laulikki Äpy and everyone at Rektorsgatan 1 for all the fun times, and not without a reason. Lastly, I want to thank my family, grandparents and everyone else who have supported me through the years. Thank you Mamma and Pappa for always believing in me. I always knew I could do it, thanks for you always knowing it too. And finally, thank you Markus for being by my side all along.
“…This then gives the company a possibility to exercise market power at that hour. Usually 110 % is used as a threshold (Mulder and Schoonbeek, 2013). However, the RSI cannot alone determine whether market power is being exercised, only provide a condition for the possibility of market power.…”
Energy is a fascinating subject to study. Not only is the whole energy industry undergoing a historical transition, but the problems we face require knowledge in both technology, economics and social sciences, which makes them both interesting and demanding. I feel privileged to have been able to combine all these aspects in my studies and to be part of the energy transition that is going on in the world. To be able to combine these perspec-Thesis as well has been a cherry on top. I want to thank my supervisor, Professor Sanna Syri, for providing me the opportunity to study this interesting topic and letting me be part of the Energy Efficiency and Systems group at Aalto University. Thank you Sanna for your valuable comments and words of encouragement. I also want to thank my advisor Anahita Farsaei for all the tips and support along the way. Thank you Ana for sharing your knowledge about market power indices and making me question my calculations. All my other colleagues at Aalto deserve a thank you as well. Thank you, especially Ville, for helping me with the data for the Lerner index and thank you Tiia for all the discussions and great lunch company. As this thesis marks the end of my studies, I want to thank all of you that have made my years at Aalto and in Otaniemi both many and unforgettable. Without all the amazing people I have met, I would probably have graduated a lot quicker, but many life lessons and fun experiences shorter. After all, the courses can only teach you so much. So thank you Teknologföreningen for letting me bear responsibility and for being a home, thank you for all the Friday laughs and bubbles, the sorts of things that keep you going. Thank you Phux 15 for letting me be your Phuxivator and FTMK for making me Feel so welcome over the language barrier in Otaniemi. Thank you Laulikki Äpy and everyone at Rektorsgatan 1 for all the fun times, and not without a reason. Lastly, I want to thank my family, grandparents and everyone else who have supported me through the years. Thank you Mamma and Pappa for always believing in me. I always knew I could do it, thanks for you always knowing it too. And finally, thank you Markus for being by my side all along.
“…A number of years ago, serious concerns were raised about the limited liquidity of this market and the ability of the incumbents to exert market power during peak hours (see Van Damme, 2005). Since then, the Dutch market has become more integrated with the neighbouring countries through both physical and virtual extensions of cross-border capacity (Mulder and Schoonbeek, 2013). Within the Dutch electricity market, the share of distributed generation has grown strongly to about 40%, according to Statistics Netherlands (CBS;…”
Section: Page 4 Of 34mentioning
confidence: 99%
“…The contribution of decentralized production increased from 27% in 2007 to 31% in 2011 and the share of import was about 17% in both years. The intensity of competition in the Dutch electricity market grew over time as a result of the increase in generation capacity, in particular decentralized and more cross-border capacity (Mulder and Schoonbeek, 2013;Mulder, 2015). During the off-peak hours (10PM -9AM) 5 the imported energy takes care of about 27% of the total residual demand (excluding supply from decentralized production) and the six electricity producers account for 73%.…”
“…The regulatory should monitor the electricity market to evaluate the ability of market players for exercising market power [5]. For example, the level of competitiveness in the Dutch electricity market is studied over 2006-2011 in [6]. The regulatory evaluates the market power using some indices.…”
Market power is known as the ability of units and generation companies (GenCos) to change electricity price profitably. As cleared in the definition, locational marginal price (LMP) is the most important key in market power evaluation. Therefore, the main objective of the paper is to analyze market power of units and GenCos based on their abilities to change electricity price. At the first step, using Karush-Kuhn-Tucker (KKT) conditions of Lagrangian method, LMP is decomposed into four main components. These components indicate the share of each unit at the LMP of each bus. These values are calculated by the proposed analytical method, and cannot be obtained using simulation methods. At the second step, ''unit-based LMP_S'' index, which indicates the contribution factor of each unit at LMP of each bus, is proposed as a new structural market power index. This index is also used as an effective tool to determine the most profitable coalition between two units. Using that, the market operator can predict highly potential collusions. Moreover, ''GenCosbased LMP_S'' index is proposed. Using this effective tool, the contribution of each GenCo, which owns multiple units in various buses, at the LMP of each bus is discovered. The proposed market power indices are calculated on the IEEE 24-bus test system and compared with some conventional structural market power indices. Incremental profits of units due to change of unit's strategies verify the accuracy of proposed method.
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