Abstract
The objective of this paper is to address the economic benefits in term of generation revenue and demand payment for the pool based market model in Malaysia electricity supply industry (MESI). In pool market model, there are issues on the benefit of the generators such as too high system marginal price (SMP) during peak demand and no revenue during low demand. Therefore, conceptual study for two bus test system in MESI involving four generators around Peninsular Malaysia is conducted to perform the economic analysis in term of generation revenue and demand assessment considering existing single buyer model and pool based market model, i.e., pool model, spot market model and the proposed model, in order to identify which market model is superior. As a result, the proposed model managed to decrease the demand payment as it is proportional to generation revenue, even though the generation revenue is at intermediate value and succeed to increase the low and medium generator’s revenue.
Highlights
The historical evolution of Malaysian Electricity Supply Industry (MESI) leads to the formalization of the single buyer
The comparison have been done between the single buyer model, pool model, spot market model and the proposed model in order to see the variation of economic benefit in term of Independent Power Producers (IPP)’s generation revenue, which is represented by the generators, total generation revenue based on demand, and investigation
All participated IPPs in the electricity dispatch will be paid according to the pool purchased price which is determined from hourly system marginal price (SMP), rather than the initial bid
Summary
The historical evolution of Malaysian Electricity Supply Industry (MESI) leads to the formalization of the single buyer. Worldwide experience has raised concern on the single buyer model as it is lack of transparency and fairness, poor system planning and non-competitive procurement which are some of the drawbacks due to poorly constructed [1]. Several observers citing conflict of interest, duplication of cost and tariff hikes and these concerns can be mitigated as long as the single buyer remains regulated [2]. MESI continues to face multi-dimensional challenges in term of tightness in fuel supply, industry governance and unsustainable tariff structure [3]. The pool market model is the most preferred electricity market model.
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