Demand response in adjustment markets for electricity

Crampes, Claude; Léautier, Thomas‐Olivier

doi:10.1007/s11149-015-9284-0

Cited by 21 publications

(17 citation statements)

References 10 publications

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“…As these flaws are being removed with the advent of smart metering, one extension for future research is to compare the different market design treatments and their effect on capacity provision and pricing with an elastic demand side. 30 Crampes and Léautier (2015), however, show that an active demand side may lead to a welfare decrease because of the strong asymmetry between consumers (who have private information on their value for electricity) and firms. Next to flexible energy demand, our assumption on inelastic capacity demand could be relaxed in future works.…”

Section: Discussionmentioning

confidence: 99%

Pricing and capacity provision in electricity markets: an experimental study

2017

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The creation of adequate investment incentives has been of great concern in the restructuring of the electricity sector. However, to achieve this, regulators have applied different market designs across countries and regions. In this paper we employ laboratory methods to explore the relationship between market design, capacity provision and pricing in electricity markets. Subjects act as firms, choosing their generation capacity and competing in uniform price auction markets. We compare three regulatory designs: (1) a baseline price cap system that restricts scarcity rents, (2) a price spike regime that effectively lifts these restrictions, and (3) a capacity market that directly rewards the provision of capacity. 123 124 C. Le Coq et al.line with the regulatory intention both alternative designs lead to sufficient investment albeit at the cost of higher energy prices during peak periods and substantial capacity payments in the capacity market regime. To some extent these results confirm theoretical expectations. However, we also find lower than predicted spot market prices as sellers compete relatively intensely in capacities and prices, and the capacity markets are less competitive than predicted.

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Section: Discussionmentioning

confidence: 99%

Pricing and capacity provision in electricity markets: an experimental study

2017

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“…The implementation of smart technologies improves flexibility and efficiency of system operation through the integration of more distributed energy resources (DER) and particularly a more active participation of demand. Active demand response stems from the ability for customers to reduce their consumption and trade their non-consumed kWh in the market through aggregators (Crampes and Léautier, 2015;Roos et al, 2014).…”

Section: Demand Participation and Incentives To Investmentioning

confidence: 99%

The Impact of Regulation on a Firm’s Incentives to Invest in Emergent Smart Grid Technologies

Costa¹,

Bento²,

Marques³

2017

The Energy Journal

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This paper analyzes the implementation of new technologies in network industries through the development of a suitable regulatory scheme. The analysis focuses on Smart Grid (SG) technologies which, among others benefits, could save operational costs and reduce the need for further conventional investments in the grid. In spite of the benefits that may result from their implementation, the adoption of SGs by network operators can be hampered by the uncertainties surrounding actual performances. A decision model has been developed to assess the firms' incentives to invest in "smart" technologies under different regulatory schemes. The model also enables testing the impact of uncertainties on the reduction of operational costs, and of conventional investments. Under certain circumstances, it may be justified to support the development and early deployment of emerging innovations that have a high potential to ameliorate the efficiency of the electricity system, but whose adoption face many uncertainties.

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“…Suppliers will undertake such investments after estimating their specific market share whereas the cost will be transferred to consumers by a tariff increase. The case studied in our model, as in Crampes and Léautier (2015), could be seen as a supplier vertically integrated in generation. This supplier send a price signal to consumer, signal composed by smart appliances costs and others features of the market.…”

Section: Modelling Demand Responsementioning

confidence: 99%

An analytical approach to activating demand elasticity with a demand response mechanism

Clastres¹,

Khalfallah²

2015

Energy Economics

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The aim of this work is to demonstrate analytically the conditions under which activating the elasticity of consumer demand could benefit social welfare. We have developed an analytical equilibrium model to quantify the effect of deploying demand response on social welfare and energy trade. The novelty of this research is that it demonstrates the existence of an optimal area for the price signal in which demand response enhances social welfare. This optimal area is negatively correlated to the degree of competitiveness of generation technologies and the market size of the system. In particular, it should be noted that the value of un-served energy or energy reduction which the producers could lose from such a demand response scheme would limit its effectiveness. This constraint is even greater if energy trade between countries is limited. Finally, we have demonstrated scope for more aggressive demand response, when only considering the impact in terms of consumer surplus.

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Demand response in adjustment markets for electricity

Cited by 21 publications

References 10 publications

Pricing and capacity provision in electricity markets: an experimental study

Pricing and capacity provision in electricity markets: an experimental study

The Impact of Regulation on a Firm’s Incentives to Invest in Emergent Smart Grid Technologies

An analytical approach to activating demand elasticity with a demand response mechanism

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