Electricity trading based on distribution locational marginal price

Department of Finance and Education of Guangdong Province; Education Department of Guangdong Province; Brunel University Londo

Local Market Mechanisms: how Local Markets can shape the Energy Transition

Europe has embarked on a journey towards a zero-emission system, with the power system at its core. From electricity generation to electric vehicles, the European power system must transform into an interconnected, intelligent network. To achieve this vision, active user participation is crucial, ensuring transparency, efficiency, and inclusivity. Thus, Europe has increasingly focused on the concept of markets in all their facets. This thesis seeks to answer the following questions: How can markets, often considered abstract and accessible only to high-level users, be integrated for end-users? How can market mechanisms be leveraged across various phases of the electrical system? Why is a market- driven approach essential for solving network congestions and even influencing planning? These questions shape the core of this research. The analysis unfolds in three layers, each aligned with milestones leading to 2050. The first explores how market mechanisms can be integrated into system operator development plans, enhancing system resilience in the face of changes. In this regard, this step addresses the question of how a market can be integrated into the development plans of a network and how network planning can account for uncertainties. Finally, the analysis highlights the importance of sector coupling in network planning, proposing a study in which various energy vectors lead to a multi-energy system. According to the roadmap to 2030, this layer demonstrates how markets can manage several components of the gas and electrical network. Finally, even though the robust optimisation increases the final cost in the market, it allows to cover the system operator from uncertainties. The second step delves into the concept of network congestion. While congestion management is primarily the domain of operators, it explores how technical and economic collaboration between operators and system users, via flexibility markets, can enhance resilience amid demand uncertainties and aggressive market behaviours. In addition to flexibility markets, other congestion markets are proposed, some radically different, like locational marginal pricing, and others more innovative, such as redispatching markets for distribution. Building upon the first analysis, this section addresses questions of how various energy vectors can be used not only to meet demand but also to manage the uncertainties associated with each resource. Consequently, this second part revisits the concept of sector coupling, demonstrating how various energy vectors can be managed through flexibility markets to resolve network congestion while simultaneously handling uncertainties related to different vectors. The results demonstrate the usefulness of the flexibility market in managing the sector coupling and the uncertainties related to several energy vectors. The third and most innovative step proposes energy and service markets for low-voltage users, employing distributed ledger technology. Since this step highlights topics that are currently too innovative to be realized, this third section offers a comparative study between centralised and decentralised markets using blockchain technology, highlighting which aspects of distributed ledger technology deserve attention and which aspects of low-voltage markets need revision. The results show that the blockchain technology is still in the early stage of its evolution, and several improvements are needed to fully apply this technology into real-world applications. To sum up, this thesis explores the evolving role of markets in the energy transition. Its insights are aimed at assisting system operators and network planners in effectively integrating market mechanisms at all levels of

Rural and urban dynamics and poverty: Evidence from China and India

"Like many developing countries, China and India followed development strategies biased in favor of the urban sector over the last several decades. These development schemes have led to overall efficiency losses due to misallocation of resources among rural and urban sectors. It also led to large income gaps between rural and urban areas. The urban bias was greater in China than in India. Indeed, official data show that both the income gap and the difference in poverty rates between rural and urban areas are much larger in China than in India. Both countries have corrected the rural-urban divide to some extent as part of reform processes. But the bias still exists. Other studies also support the idea presented here that correcting this imbalance will not only contribute to higher rural growth, but also secure future urban growth (Fan and Chan-Kang 2005). More important, correcting the urban bias will lead to larger reductions in poverty as well as more balanced growth across sectors and regions. Correcting a government's bias towards investment in urban areas is one of the most important policies to pursue." from Authors' AbstractRural-urban linkages ,Poverty ,

Rationales for traditional medicines utilisation and its equity implications: the case of Ghana

Individuals all over the world continue to utilise traditional health care, but there is very little understanding of why this is the case, especially in light of increased availability and accessibility of effective pharmaceutical medicine and other modern technologies. The overarching objective of this thesis is to investigate rationales for utilisation of traditional medicines, using Ghana as a case study. This thesis argues that institutional constraints and cultural preferences inherited from the past shape pluralistic health systems and, consequently, individual health-seeking behaviour. The thesis fuses investigative approaches from different disciplines (e.g. anthropology, economics, psychology) and uses statistical methods to analyse four aspects of medicines utilisation: the role of culture, income, the possibility of a placebo effect in use and finally, the distributional consequences manifested in utilisation inequities. Findings indicate that cultural attitudes and income constraints are associated with use of traditional systems, and users report high rates of satisfaction that are attributable to procedural factors. Inequities are shown to differ according to whether traditional medicines are included in analysis. Generally, this thesis advocates a holistic approach with respect to health systems, as opposed to interpreting traditional systems as simply appendages to modern health care systems; the latter perspective is liable to yield observers only a partial story of medicines utilisation and its impact on equity

A simulation framework for electricity markets

Electricity Markets are paramount to the economy of any country and therefore lie at the foundation of society. These markets are usually very complex when compared to traditional financial markets due to the physical nature of the asset traded, difficulty of storage and distribution. Supply and demand balancing, network constraints, renewable energy influx, desire of participants to maximise their own profits, their risk aversion, fuel costs required for production, and the market clearing mechanism, do not exhaust the list of factors that influence the market outcome, but are perhaps the most important ones. The market outcome includes the prices and quantities allocated whose understanding is of great importance for market regulators and market participants alike. This work is focused on improving the fundamental understanding of the Spot Electricity Markets which lie at the core of Electricity Trading and represent the majority of trading volume. In particular we focus on Day Ahead Auctions which represent the vast majority of Spot Electricity trading, due to the difficulty of storing electricity, coupled with uncertainty in demand and production patterns. Every market has its own peculiarities and, we consider as a case study the Central Western European (CWE) Day Ahead Auction (DAA) for the period of 01/01/2019−31/12/2019. The Central Western European market includes Austria, Belgium, Germany, France and the Netherlands. Following an introductory chapter, due to the lack of full and complete network constraints historical data, Chapter 2 is focused on the reconstruction of historical network constraints, that are a key input in any fundamental model considering the electricity grid’s structure. Further, network constraints may impose price decoupling between countries, which is of great interest to practitioners, academics and regulators. The task is very challenging due to the input data being very large and sparse. We reconstruct the network constraints data, known as the Power Transmission Distribution Factors (PTDFs) and Remaining Available Margins (RAMs), by first recovering the underlying time dependent signals known as the Generation Shift Keys (GSKs) and Phase Angles (PAs), and the electricity grid characteristics, via a mathematical optimisation problem that is solved by exploiting problem structure. The second step maps GSKs and PAs to the network constraints via the electricity grid characteristics. Our reconstruction achieves good in- and out-of- sample relative errors when compared to a naive approach. With the network constraints available, and by obtaining the cost and capacity characteristics of suppliers, in Chapter 3 we formulate a fundamental model to resolve for the zonal prices and quantities assigned to each participant, based on a simplification of the CWE market clearing mechanism, known as the Social Welfare Maximisation Problem (SWM). We also propose a novel market clearing mechanism which we call the Total Cost Minimisation Problem, because as we show, the prices are generally much lower and the total cost of supplying electricity is guaranteed to be lower by definition. Solving the Cost Minimisation problem is more challenging than solving the SWM, due to zonal prices appearing as explicit variables, but we obtain strong (but partial) analytical results to aid numerical solutions and provide efficient numerical algorithms. For both clearing mechanisms, demand is considered as inflexible, and producers bid marginal prices linear in the quantities produced. Since as expected, the SWM better represents the target data, this is further used as the market clearing mechanism. We consider the case when producers truthfully bid (TB) their cost curves, which is usually assumed by the regulators and many academic papers. However, we also consider the case of players trying to maximise their own profit, tand thus forming a Game Theoretic (GT) framework. For our CWE case study, both GT and TB models generally give an accurate representation of the actual price outcomes. Further, we define a method based on simple hypothesis testing to identify if and when the players are bidding strategically (gaming). We show that in fact, while for a large majority of times we cannot say with high confidence whether the players are bidding strategically or bidding truthfully, the number of times we are confident that players are gaming is much higher than the number of times we are confident that the players are bidding truthfully. Our results show that, in general, strategic bidding appears to be especially pronounced at peak demand hours: between 8am − 1pm and 5pm − 9pm. A different regime, where renewable energy influx appears to dominate the price action is also identified and this effect is generally more pronounced at off-peak morning hours (0am − 6am). Our model can thus be used as a fundamental approach for market outcome and price prediction, understanding the impact various fundamental factors on the price, understanding of producers’ behaviour, and identifying if and when players are not bidding truthfully. These are all of interest to academics, market participants, and regulators

Electricity Market Design 2030-2050: Moving Towards Implementation

Climate change and ambitious emission-reduction targets call for an extensive decarbonization of electricity systems, with increasing levels of Renewable Energy Sources (RES) and demand flexibility to balance the variable and intermittent electricity supply. A successful energy transition will lead to an economically and ecologically sustainable future with an affordable, reliable, and carbon-neutral supply of electricity. In order to achieve these objectives, a consistent and enabling market design is required. The Kopernikus Project SynErgie investigates how demand flexibility of the German industry can be leveraged and how a future-proof electricity market design should be organized, with more than 80 project partners from academia, industry, governmental and non-governmental organizations, energy suppliers, and network operators. In our SynErgie Whitepaper Electricity Spot Market Design 2030-2050 [1], we argued for a transition towards Locational Marginal Prices (LMPs) (aka. nodal prices) in Germany in a single step as a core element of a sustainable German energy policy. We motivated a well-designed transition towards LMPs, discussed various challenges, and provided a new perspective on electricity market design in terms of technological opportunities, bid languages, and strategic implications. This second SynErgie Whitepaper Electricity Market Design 2030-2050: Moving Towards Implementation aims at further concretizing the future German market design and provides first guidelines for an implementation of LMPs in Germany. Numerical studies –while not being free of abstractions –give evidence that LMPs generate efficient locational price signals and contribute to manage the complex coordination challenge in (long-term) electricity markets, ultimately reducing price differences between nodes. Spot and derivatives markets require adjustments in order to enable an efficient dispatch and price discovery, while maintaining high liquidity and low transaction costs. Moreover, a successful LMP implementation requires an integration into European market coupling and appropriate interfaces for distribution grids as well as sector coupling. Strategic implications with regard to long-term investments need to be considered, along with mechanisms to support RES investments. As a facilitator for an LMP system, digital technologies should be considered jointly with the market design transition under an enabling regulatory framework. Additional policies can address distributional effects of an LMP system and further prevent market power abuse. Overall, we argue for a well-designed electricity spot market with LMPs, composed of various auctions at different time frames, delivering an efficient market clearing, considering grid constraints, co-optimizing ancillary services, and providing locational prices according to a carefully designed pricing scheme. The spot market is tightly integrated with liquid and accessible derivatives markets, embedded into European market coupling mechanisms, and allows for functional interfaces to distribution systems and other energy sectors. Long-term resource adequacy is ensured and existing RES policies transition properly to the new market design. Mechanisms to mitigate market power and distributional effects are in place and the market design leverages the potential of modern information technologies. Arapid expansion of wind andsolar capacity will be needed to decarbonize the integrated energy system but will most likely also increase the scarcity of the infrastructure. Therefore, an efficient use of the resource "grid" will be a key factor of a successful energy transition. The implementation of an LMPs system of prices with finer space and time granularity promises many upsides and can be a cornerstone for a futureproof electricity system, economic competitiveness, and a decarbonized economy and society. Among the upsides, demand response (and other market participants with opportunity costs) can be efficiently and coherently incentivized to address network constraints, a task zonal systems with redispatch fail at. The transition to LMPs requires a thorough consideration of all the details and specifications involved in the new market design. With this whitepaper, we provide relevant perspectives and first practical guidelines for this crucial milestone of the energy transition