Asymmetric demand information in uniform and discriminatory call auctions: an experimental analysis motivated by electricity markets

We study the outcomes of experimental multi-unit uniform and discriminatory auctions with demand uncertainty. Our study is motivated by the ongoing debate about market design in the electricity industry. Our main aim is to compare the effect of asymmetric demand-information between sellers on the performance of the two auction institutions. In our baseline conditions all sellers have the same information, whereas in our treatment conditions some sellers have better information than others. In both information conditions we find that average transaction prices and price volatility are not significantly different under the two auction institutions. However, when there is asymmetric information among sellers the discriminatory auction is significantly less efficient. These results are not in line with the typical arguments made in favor of discriminatory pricing in electricity industries; namely, lower consumer prices and less price volatility. Moreover, our results provide some indication that discriminatory auctions reduce technical efficiency relative to uniform auctions.Experiments, asymmetric information, discriminatory price auctions, uniform price auctions, electricity industries

A Classification Scheme for Local Energy Trading

The current trend towards more renewable and sustainable energy generation leads to an increased interest in new energy management systems and the concept of a smart grid. One important aspect of this is local energy trading, which is an extension of existing electricity markets by including prosumers, who are consumers also producing electricity. Prosumers having a surplus of energy may directly trade this surplus with other prosumers, which are currently in demand. In this paper, we present an overview of the literature in the area of local energy trading. In order to provide structure to the broad range of publications, we identify key characteristics, define the various settings, and cluster the considered literature along these characteristics. We identify three main research lines, each with a distinct setting and research question. We analyze and compare the settings, the used techniques, and the results and findings within each cluster and derive connections between the clusters. In addition, we identify important aspects, which up to now have to a large extent been neglected in the considered literature and highlight interesting research directions, and open problems for future work.Comment: 38 pages, 1 figure, This work has been submitted and accepted at OR Spectru

Incentives for energy efficiency in the EU Emissions Trading Scheme

This paper explores the incentives for energy efficiency induced by the European Union Emissions Trading Scheme (EU ETS) for installations in the energy and industry sectors. Our analysis of the National Allocation Plans for 27 EU Member States for phase 2 of the EU ETS (2008-2012) suggests that the price and cost effects for improvements in carbon and energy efficiency in the energy and industry sectors will be stronger than in phase 1 (2005-2007), but only because the European Commission has substantially reduced the number of allowances to be allocated by the Member States. To the extent that companies from these sectors (notably power producers) pass through the extra costs for carbon, higher prices for allowances translate into stronger incentives for demand- side energy efficiency. With the cuts in allocation to energy and industry sectors these will be forced to greater reductions, thus the non-ET sectors like household, tertiary and transport will have to reduce less, which is more in line with the cost-efficient share of emission reductions. The findings also imply that domestic efficiency improvements in the energy and industry sectors may remain limited since companies can make substantial use of credits from the Kyoto Mechanisms. The analysis of the rules for existing installations, new projects and closures suggests that incentives for energy efficiency are higher in phase 2 than in phase 1 because of the increased application of benchmarking to new and existing installations and because a lower share of allowances will be allocated for free. Nevertheless, there is still ample scope to further improve the EU ETS so that the full potential for energy efficiency can be realized. --Climate policy,emission trading,energy efficiency,innovation

An early assessment of national allocation plans for phase 2 of EU emission trading

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A Systematic Literature Review of Peer-to-Peer, Community Self-Consumption, and Transactive Energy Market Models

Capper, T., Gorbatcheva, A., Mustafa, M. A., Bahloul, M., Schwidtal, J. M., Chitchyan, R., Andoni, M., Robu, V., Montakhabi, M., Scott, I., Francis, C., Mbavarira, T., Espana, J. M., & Kiesling, L. (2021). A Systematic Literature Review of Peer-to-Peer, Community Self-Consumption, and Transactive Energy Market Models. Social Science Research Network (SSRN), Elsevier. https://doi.org/10.2139/ssrn.3959620Peer-to-peer and transactive energy markets, and community or collective self-consumption offer new models for trading energy locally. Over the past 10 years there has been significant growth in the amount of academic literature and trial projects examining how these energy trading models might function. This systematic literature review of 139 peer-reviewed journal articles examines the market designs used in these energy trading models. The Business Ecosystem Architecture Modelling framework is used to extract information about the market models used in the literature and identify differences and similarities between the models. This paper identifies six archetypal market designs and three archetypal auction mechanisms used in markets presented in the reviewed literature. It classifies the types of commodities being traded, the benefits of the markets and other features such as the types of grid models. Finally, this paper identifies five evidence gaps which need future research before these markets can be widely adopted.publishersversionpublishe

Evaluation of Energy Market Platforms Potential in Microgrids: Scenario Analysis Based on a Double-Sided Auction

Local energy markets represent a mean for distributed energy resources trading for prosumers and energy management for utilities. In these markets, prosumers either trade or shift their loads to maximize their trading gains via communicating with an energy market platform. The utility considers the trading process as an approach to maximize the autonomy and minimize the peak loads. The benefits of the prosumer and utility can vary depending on several parameters such as the market rules, microgrid configurations, or the lifestyle and social behavior of the market participants. In this paper, selected scenarios are presented that discuss and analyze the major factors influencing the market dynamics and microgrid energy balance based on a forward double-sided auction market model simulation. These scenarios are divided into three scenario groups that consider market design parameters, microgrid configurations, and user behavior. Furthermore, the same scenarios are once more evaluated using a reference model, where no market platform is integrated, so that the results of the energy market can be compared. The results are analyzed based on multiple metrics from the perspective of the prosumer and utility to quantify and compare the benefits of the two major market players

Asymmetric demand information in uniform and discriminatory call auctions : an experimental analysis motivated by electricity markets

We study the outcomes of experimental multi-unit uniform and discriminatory auctions with demand uncertainty. Our study is motivated by the ongoing debate about market design in the electricity industry. Our main aim is to compare the effect of asymmetric demand-information between sellers on the performance of the two auction institutions. In our baseline conditions all sellers have the same information, whereas in our treatment conditions some sellers have better information than others. In both information conditions we find that average transaction prices and price volatility are not significantly different under the two auction institutions. However, when there is asymmetric information among sellers the discriminatory auction is significantly less efficient. These results are not in line with the typical arguments made in favor of discriminatory pricing in electricity industries; namely, lower consumer prices and less price volatility. Moreover, our results provide some indication that discriminatory auctions reduce technical efficiency relative to uniform auctions