E-raamat: Economics of Electricity Markets

"The book covers the basic modelling of electricity markets, including the impact of uncertainty, an integral part of generation investment decisions and transmission cost-benefit analysis"--

With the transition to liberalized electricity markets in many countries, the shift to more environmentally sustainable forms of power generation and increasing penetration of electric vehicles and smart appliances, a fundamental understanding of the economic principles underpinning the electricity industry is vital. Using clarity and precision, the authors successfully explain the economic theory of all liberalized electricity market types from a cross-disciplinary engineering and policy perspective. No prior engineering knowledge or economics expertise is assumed in introducing key ideas such as nodal pricing, optimal dispatch and efficient pricing or in extending those models to areas including investment, risk management and the handling of contingencies.

Key features:

• Comprehensively covers the principles of all liberalized electricity market types, including the US, Europe, New Zealand and Australia.

• Provides up-to-date coverage of research and policy issues, including design of financial transmission rights, modeling of market power, problems of regional pricing, and design of distribution pricing to facilitate Smart Grid.

• Spans introductory material to cutting-edge thinking on risk-management and short-run dispatch.

• Supports independent learning and teaching with worked examples and problems, enabling the reader to test and further deepen their understanding, whilst also promoting their insight and intuition.

• Solutions to problems and figures are hosted on a companion website.

This ground-breaking text is an indispensable resource for the next generation of engineers, economists and policy-makers in or preparing to enter the electricity sector. Graduate students in electrical engineering and economics will benefit from the breadth of material and detailed, economically precise presentation.



Bridges the knowledge gap between engineering and economics in a complex and evolving deregulated electricity industry, enabling readers to understand, operate, plan and design a modern power system

With an accessible and progressive style written in straight-forward language, this book covers everything an engineer or economist needs to know to understand, operate within, plan and design an effective liberalized electricity industry, thus serving as both a useful teaching text and a valuable reference. The book focuses on principles and theory which are independent of any one market design. It outlines where the theory is not implemented in practice, perhaps due to other over-riding concerns. The book covers the basic modelling of electricity markets, including the impact of uncertainty (an integral part of generation investment decisions and transmission cost-benefit analysis). It draws out the parallels to the Nordpool market (an important point of reference for Europe). Written from the perspective of the policy-maker, the first part provides the introductory background knowledge required. This includes an understanding of basic economics concepts such as supply and demand, monopoly, market power and marginal cost. The second part of the book asks how a set of generation, load, and transmission resources should be efficiently operated, and the third part focuses on the generation investment decision. Part 4 addresses the question of the management of risk and Part 5 discusses the question of market power. Any power system must be operated at all times in a manner which can accommodate the next potential contingency. This demands responses by generators and loads on a very short timeframe. Part 6 of the book addresses the question of dispatch in the very short run, introducing the distinction between preventive and corrective actions and why preventive actions are sometimes required. The seventh part deals with pricing issues that arise under a regionally-priced market, such as the Australian NEM. This section introduces the notion of regions and interconnectors and how to formulate constraints for the correct pricing outcomes (the issue of "constraint orientation"). Part 8 addresses the fundamental and difficult issue of efficient transmission investment, and finally Part 9 covers issues that arise in the retail market.

• Bridges the gap between engineering and economics in electricity, covering both the economics and engineering knowledge needed to accurately understand, plan and develop the electricity market
• Comprehensive coverage of all the key topics in the economics of electricity markets
• Covers the latest research and policy issues as well as description of the fundamental concepts and principles that can be applied across all markets globally
• Numerous worked examples and end-of-chapter problems Companion website holding solutions to problems set out in the book, also the relevant simulation (GAMS) codes