Integrating Transmission and Energy Markets Mitigates Market Power

Integrating Transmission and Energy Markets Mitigates Market Powe

4th Congress of the European Project Quality Low Input Food

The fourth annual scientific congress of the QLIF project took place during 19-20 June 2008 at the occassion of the 16th IFOAM Organic World Congress in Modena, Italy, where ISOFAR also organized their 2nd Scientific Conference. During the Organic World Congress QLIF offered a series of five outstanding workshops where central organic themes were highlighted during a synthesis paper written by a team of QLIF authors. Subseqently, the workshops made room for an exhaustive, moderated discussions

Opening the Electricity Market to Renewable Energy: Making Better Use of the Grid

Opening the electricity market to renewable energy sources would create flexibility for the further integration of renewable energy, leading to considerably lower costs and emissions. This requires the electricity markets to be reorganized in three ways. Firstly, most trading, and therefore production decision-making, is completed at least one day prior to electricity production. But it must be possible to make adjustments on shorter timescales, in order to effectively utilize wind forecasts, which are only relatively accurate a few hours ahead of production. Secondly, demand for operating reserve to stabilize the grid varies with the uncertainty of forecasts for wind and other generation. Most power plants can offer operating reserve, but only together with electricity. At present, however, operating reserve is traded separately from electricity, often in long-term contracts. And thirdly, network operators generally compensate market participants for grid constraints. But with around 200 GWs of new wind and solar capacity being built by 2020, grid expansion must be combined with transparent, market-based congestion management. The introduction of an independent system operator offering an integrated platform for short-term power trading using a pricing system that internalises network constraints ("nodal pricing") could meet these conditions, allowing further openings of the power market for renewable electrical energy. Experience in the US and simulations for Europe show that international transmission capacity is up to 30% better utilized, congestion management alone yielding annual savings of 1 - 2 billion euros.Market design, renewable energy, nodal pricing, transmission

Large Scale Deployment of Renewables for Electricity Generation

Comparisons of resource assessments suggest resource constraints are not an obstacle to the large-scale deployment of renewable energy technologies. Economic analysis identifies barriers to the adoption of renewable energy sources resulting from market structure, competition in an uneven playing field and various non-market place barriers. However, even if these barriers are removed, the problem of ‘technology lock-out’ remains. The key policy response is strategic deployment coupled with increased R&D support to accelerate the pace of improvement through market experience. The paper suggests significant contributions from various technologies, but does not assess their optimal or maximal market share.technology policy, renewable energy, learning externalities, market structure

Learning curves and changing product attributes: the case of wind turbines

The heuristic concept of learning curves describes cost reductions as a function of cumulative production. A study of the Liberty shipbuilders suggested that product quality and production scale are other relevant factors that affect costs. Significant changes of attributes of a technology must be corrected when assessing the impact of learning-by-doing. We use an engineering-based model to capture the cost changes of wind turbines that can be attributed to changes in turbine size. We estimate the learning curve and turbine size parameters using more than 1500 price points from 1991 to 2003. The fit between model and empirical data confirms the concept

Definition of a Balancing Point for Electricity Transmission Contracts

Electricity transmission contracts allocate scarce resources, allow hedging against locational price differences and provide information to guide investment. Liquidity is increased if all transmission contracts are defined relative to one balancing point, then a set of two contracts can replicate any point to point contract. We propose an algorithm and apply it to the European electricity network to identify a well connected balancing point that exhibits minimal relative cross-price responses and hence reduces market power exercised by generation companies. Market level data which is difficult to obtain or model such as price levels in different regions or that is dependent on the time scale of interaction, as demand elasticity, is not required. The only critical input quantities are assumptions on future transmission constraint patterns

Modelling Dynamic Constraints in Electricity Markets and the Costs of Uncertain Wind Output

Building on models that represent inter-temporal constraints in the optimal production decisions for electricity generation,the paper analysis the resulting costs and their impact on prices during the day. We linearise the unit commitment problem to facilitate th

Market Power and Technological Bias: The Case of Electricity Generation

It is difficult to elminated all market power in electricity markets and it is therefore frequently suggested that some market power should be tolerated: extra revenues contribute to fixed cost recovery,facilitate investment and increase security of supply. This suggestion implicitly assumes all generation technologiesbenefit equally from market power. We assess a mixture of conventional and intermittent generation, eg coal plants and wind power. If all output is sold in the spot market, then intermittent generation benefits less frommarket power than conventional generation. Forward contracts or option contracts reduce the levelof market power but bias against intermittent generators persists

Auctions to gas transmission access: The British experience

Auctions to gas transmission access: The British experienc