Competitive Generation Market Research Articles

Electricity market reform failures: UK, Norway, Alberta and California

An analysis of electricity market reforms already taken place in the UK, Norway, Alberta (Canada) and California (USA) leads to our overall conclusion that the introduction of a competitive generation market, of itself, has failed to deliver reliable service at low and stable prices. The market reform failures are attributed to market power abuse by few dominant sellers (especially at times of transmission congestion), poor market design that invites strategic bidding by suppliers, the lack of customer response to price spikes, capacity shortage caused by demand growth not matched by new capacity, and thin trading of forward and futures contracts that are critical for price discovery and risk management. The paper then explains why an electricity market reform can easily fail to deliver the promised gains of better service at lower and more stable prices. The policy implication is that an electric market reform can be extremely risky, and may lead to a disastrous outcome. Thus, it is imprudent to implement such a reform in countries with limited sites for new generation and no indigenous fuels (e.g., Israel and Hong Kong). These countries should therefore consider introducing performance-based regulation that can immediately benefit electricity consumers in terms of lower prices, more stable prices, improved reliability, more choices, while encouraging the electric sector to pursue efficient operation and investment.

Capability charts for combined cycle power plants

Thermal power plants, based on combined gas and steam turbine cycles, are now worldwide. In a competitive generation market, power plants are required not only to inject active power but also to support secure operation of the transmission system, providing adequate ancillary services. To determine power plant capability for supporting voltage/reactive power regulation of the power system, the active and reactive powers that a combined cycle power plant can inject into the power system must be evaluated. The concept of capability charts is therefore extended from synchronous generators to the whole combined cycle power plant, including the effects of the operating conditions of the thermal and electrical components of the power plant, as well as of the plant connection to the electrical power system. Steady-state mathematical models are presented and a modular algorithm is proposed to evaluate the power plant capability charts numerically. Some numerical results are presented to show the effective synthetic information that can be obtained by adopting the proposed approach in practical cases.

Discussion of "a simulation model for a competitive generation market"

Two sets of authors discuss the paper A simulation model for a competitive generation market (see ibid., vol.15, no.1, p.250-6, 2000), requesting comments and clarification on the proposed simulation tool for mainland Spain's competitive electricity market. The original authors' responses to these discussions are also included.

Discussion of "A simulation model for a competitive generation market"

Two sets of authors discuss the paper "A simulation model for a competitive generation market" (see ibid., vol.15, no.1, p.250-6, 2000), requesting comments and clarification on the proposed simulation tool for mainland Spain's competitive electricity market. The original authors' responses to these discussions are also included.

Closure to discussion of "a simulation model for a competitive generation market"

Closure to discussion of "a simulation model for a competitive generation market"

The U.S. Electricity Sector: What after California?

Without reserves in the range of 15 to 18 percent, California-type shortages are sure to recur, and politicians will start to distance themselves from competitive generation market solutions.

A simulation model for a competitive generation market

The simulation of a wholesale electricity market should go beyond a simple optimization based on the operating costs of the generating units. A model of a competitive electricity market must consider the market structure, the strategy of the market participants and any other factor that lead to prices different from costs. This paper presents COSMEE, a model of a wholesale electricity market based on simple bids, that estimates expected bid prices and quantities, system hourly prices and generation schedules, taking into account the bidding strategies of generators and the structure of the market. The model reflects the profit-maximizing behavior of the market agents, subject to different types of constraints. COSMEE has been used to simulate a real wholesale market.

Transmission rights, through the looking-glass: a false dichotomy between active and passive trading

The dichotomy between dispatch of generation and use of transmission is a fallacy. Once the dispatch is determined, transmission use follows from the physical laws; once transmission use is determined, the dispatch follows from the same physical laws. This duality explains why TCCs can do the job as well as active rights in a competitive generation market—and with lower transaction costs.

An introduction to the pricing of electric power transmission

The electric power transmission network plays an important role in the delivery of energy from outlying generation to demand centers located far away. Because power plants are interconnected via the transmission network, together they can provide improved reliability and lower overall generation costs. With the current thrust towards a competitive generation market with new independent entrants, the ‘correct’ spot pricing of electric power transmission service is crucial in providing signals to the marketplace for efficient short-run operations and long-term capital investments. The fundamental theory of transmission pricing is presented and three alternative market/pricing structures, contract network, financial replication and property rights, are discussed.

A critical review of deregulated foreign electric utility markets

In recent years there has been a growing consensus within the electric utility industry that increased competition is inevitable. This article examines four competitive utility models from around the world to determine whether a competitive generation market will produce lower electric rates. The analysis shows that the British, Norwegian, Argentinean and Chilean experiences may provide limited support for electric utility reform in the US. But many of these foreign systems have abundant, low-cost, hydroelectric power or involve privatisation of publicly owned facilities which may offer benefits not available in the US, where electric rates are relatively low already.

The competitive generation market has been assumed, not proven

Where a competitive market structure does not exist, buyers' or sellers' pursuit of their self-interests will ensure an inefficient outcome. Such is the state of the industry today. The task at hand is to correct the defects in the market so that consumers can enjoy the benefits of efficient, competitively provided electric power.