New Modeling Tools for Energy Markets

Abstract

he electricity industry has been undergoing major changes. Recent events such s the collapse of Enron, California power crisis, the Great Blackout in the East oast, and the FERC’s Standard Market Design clearly indicate the challenges nd complexity embedded by this industrial restructuring, demanding new modling tools for energy planning, operation, and management. This special issue is he second of two devoted to the quantitative models for dealing with impacts of hese changes on energy market modeling. The four papers in this issue provide broad range of applications in energy markets. The first special issue addressed ystematic issues stemming from these changes. The first paper, “Modeling a Hydrothermal System with Hydroand Snow eservoirs,” by Magnus Hindsberger, analyzes the impact of variable precipitaion on the prices of the Nordic power market. The second paper, entitled “Inestment Model for Power Generation and Transmission Network Expansion in urkey,” by Kiran Gampala, Linet Ozdamar, and Shaligram Pokharel, proposes n optimization model for concurrent transmission and generation investment lans. The third paper in this issue, entitled “Impact of Market Uncertainty on Conestion Revenue Right Valuation,” by Haibin Sun, Shi-Jie Deng, and A. P. Sakis eliopoulos, uses Monte Carlo simulation to value congestion revenue rights ncluding financial transmission rights ~FTR! and flowgate rights ~FGR!. The nal paper by Jorge F. Valenzuela, entitled “Analytical Approximation to the robability Distribution of Electricity Marginal Production Costs” proposes an nalytical method to estimate marginal production costs, which could potentially enefit market participants in a deregulated environment. With the papers covering a variety of topics in the deregulated power markets, t is hoped that they can motivate new research on the array of important probems arising in this fast-changing industry.