Abstract
Developing economies are in process of liberalizing their electricity markets, following similar process in developed economics. This process aims at establishing liquid energy exchanges that provide clear price signals, providing indications on the profitability of different operations: production, retail, trading in interconnections. This paper aims at developing a unit commitment model for examining zonal market pricing in Kazakhstan. The latter has an extensive landscape but sparsely populated, while is also characterized by the high availability of domestic fossil fuels, but located in different sub-regions of the country. The provision of zonal price signals in such a power system in invaluable, as it enables the provision of clear price signals on the needed infrastructure and the estimation of the zonal hourly energy and technology mix. Moreover, in enables the formation of dynamic bidding strategies by market participants in cases with favourable conditions, such as the implementation of scarcity pricing. This paper presents a unit commitment model that used to assess different bidding strategies and to provide zonal price signals. The strategies are formed, depending on the technology type and fuel prices comparison. Results provide clear signals on needed infrastructure among zones in Kazakhstan. It also shows that dynamic biding can lead to market coupling. Finally, it indicates the importance of institutional capability to monitor bidding strategies, eliminating speculation.
Highlights
A crucial issue in liberalization of electricity markets is the design of the wholesale market
This paper aims to provide zonal pricing in Kazakhstan power system with a unit commitment model, through the assessment of different market strategies
The objective function is based on the short-term market operation, namely the minimization of the total operational cost of the studied power system at one daily period, solved over a 24-h period
Summary
A crucial issue in liberalization of electricity markets is the design of the wholesale market. Regulators usually have to choose among zonal and nodal pricing mechanisms, in order to provide the appropriate price signals, as well as to create liquid and competitive markets. Zonal markets are useful in cases where congestion is frequent among power sub-systems, as it provides clear signals for the needed interconnection infrastructure. Nodal markets enable the provision of even ore detailed price signals to capture local congestion in heavily populated areas. Kazakhstan has an extensive territory, as well as is distributed and sparsely populated. The adoption of a zonal pricing system fits very well to its current needs
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