Pool Market Research Articles

High penetration wind generation impacts on spot prices in the Australian national electricity market

This paper explores wind power integration issues for the South Australian (SA) region of the Australian National Electricity Market (NEM) by assessing the interaction of regional wind generation, electricity demand and spot prices over 2 recent years of market operation. SA's wind energy penetration has recently surpassed 20% and it has only a limited interconnection with other regions of the NEM. As such, it represents an interesting example of high wind penetration in a gross wholesale pool market electricity industry. Our findings suggest that while electricity demand continues to have the greatest influence on spot prices in SA, wind generation levels have become a significant secondary influence, and there is an inverse relationship between wind generation and price. No clear relationship between wind generation and demand has been identified although some periods of extremely high demand may coincide with lower wind generation. Periods of high wind output are associated with generally lower market prices, and also appear to contribute to extreme negative price events. The results highlight the importance of electricity market and renewable policy design in facilitating economically efficient high wind penetrations.

Optimal Locating and Sizing of SSSC using Genetic Algorithm in Deregulated Power Market

The aim of this paper is presenting a genetic algorithm based method for congestion management and to maximize social welfare using one unit Static Synchronous Series Compensator (SSSC) in a double auction pool market based power systems. The aims are achieved by optimal locating and sizing one SSSC unit. In this paper, the GenCos cost functions are considered to be the quadratic form. Simulation outcomes on the modified IEEE 14 bus test system are used to show the impact of SSSC unit on the congestion management and social welfare maximization. Inclusion of the benefit functions of customer in the objective function and the utilization of a GA based algorithm for optimal locating/sizing of SSSC to guarantee fast convergence to the global optimal solution are the main contributions. Keywordssocial welfare maximization; congestion management; deregulated power market; genetic algorithms; SSSC; optimal power flow

The mechanisms of agglomeration: Evidence from the effect of inter-industry relations on the location of new firms

The objective of this paper is to explore the relative importance of each of Marshall’s agglomeration mechanisms by examining the location of new manufacturing firms in Spain. In particular, we estimate the count of new firms by industry and location as a function of (pre-determined) local employment levels in industries that: (1) use similar workers (labor market pooling); (2) have a customer–supplier relationship (input sharing); and (3) use similar technologies (knowledge spillovers). We examine the variation in the creation of new firms across cities and across municipalities within large cities to shed light on the geographical scope of each of the three agglomeration mechanisms. We find evidence of all three agglomeration mechanisms, although their incidence differs depending on the geographical scale of the analysis.

Risk Management in the Cooperative Contract

Agricultural cooperatives have long played an important role in helping their members manage risk. Yet the typical cooperative does a much better job of helping their members manage some sorts of risk than it does others. In particular, co-ops are good at helping members manage marketing risk, or idiosyncratic variation in prices observed within the course of a single season. However, agricultural cooperatives seem not to be particularly good at helping their members to manage production risk, which involves variation in yield over the course of several years. This paper argues that by taking advantage of the multi-year nature of most members' relationship with the cooperative, the cooperative can also provide a useful (though limited) form of insurance against crop shortfalls.Agricultural producers face various sorts of risk; some of these are difficult to manage using standard institutions. Agricultural cooperatives can play an important role in helping their members to manage these sources of risk. For example, marketing co-ops traditionally help to reduce price risk by pooling sales across time and space, and could reduce production risk by making some payments to members on the basis of predetermined shares, rather than on actual delivery or patronage.However, just because a cooperative can help its members manage risk doesn't mean that membership in a cooperative will serve as a useful means for dealing with risk. The details of a cooperative's by-laws, management of equity, mechanisms governing the transfer of delivery rights, methods of capitalization, pooling rules, and expansion options can all have a big impact on the usefulness of the cooperative structure as a risk-management tool for users.Here, we provide an enumeration of some different sorts of shocks which may be important to agricultural producers, and then describe the manner in which a typical cooperative market pooling mechanism can reduce the risk associated with these shocks. However, market pools don't help producers manage yield risk at all|the cooperative must deploy a different mechanism if it is to help members manage shocks to output.Accordingly, we describe a simple way of structuring an agricultural marketing cooperative's operations so as to best help members manage yield risk, in addition to the other sources of risk they face. Marketing cooperatives o er the greatest scope for mutual insurance among members, and so will serve as the principal focus of the proposed paper, but some approaches to risk management will apply to other forms of cooperatives.

Outsourcing, labor market pooling, and labor contracts

This paper considers the interaction between input sharing and labor market pooling in urban areas. In particular, it examines the impact of the size of a city and business risks on the organizational structures of firms located in urban agglomerations, and it also discusses the impact of organizational structure on incentives to insure workers against income risks. It is shown that manufacturing firms suffer from a coordination game in their decision to outsource production. The existence of idiosyncratic risks causes manufacturers to refrain from outsourcing. The incentives to offer wage and employment protection to workers are more pronounced when manufacturers outsource the production of their inputs to a local market, which mitigates the impact of labor market pooling.

Generation expansion planning in Pool market: A hybrid modified game theory and particle swarm optimization

Unlike the traditional policy, Generation Expansion Planning (GEP) problem in competitive framework is complicated. In the new policy, each GENeration COmpany (GENCO) decides to invest in such a way that obtains as much profit as possible. This paper presents a new hybrid algorithm to determine GEP in a Pool market. The proposed algorithm is divided in two programming levels: master and slave. In the master level a modified game theory (MGT) is proposed to evaluate the contrast of GENCOs by the Independent System Operator (ISO). In the slave level, a particle swarm optimization (PSO) method is used to find the best solution of each GENCO for decision-making of investment. The validity of the proposed method is examined in the case study including three GENCOs with multi-types of power plants. The results show that the presented method is both satisfactory and consistent with expectation.

Access to Workers or Employers? An Intra-Urban Analysis of Plant Location Decisions

This analysis attributes economies of agglomeration to either labor market pooling or employer-based productivity spillovers by distinguishing the effect of access to workers, measured by place-of-residence, from the effect of access to employers. New establishment location choices serve as a measure of productivity advantages, while census tract level data on access to same-industry employment, other-industry employment, and specialized workers, as well as metropolitan area fixed effects, measure sources of agglomeration and other locational characteristics. The four industries included are selected so that each relies on a workforce with a specialized occupation that is identifiable by place-of-residence, and that productivity and cost advantages are the primary drivers of location choice. The results show that both access to specialized workers and access to same-industry employers contribute to economies of agglomeration at an intra-urban spatial scale, and that the magnitude of the worker effect is large relative to employer-based productivity spillovers.

Transmission loss allocation through modified Z-bus

The transmission loss allocation problem in a deregulated electric power system is first discussed in this paper and then a new method is presented that is applicable under the pool market structure. Given the load flow solution of a network, the method can be implemented easily to allocate active power loss among the market participants. In this approach, a relationship between the bus current injections and the generator or load currents is first determined using a power invariant matrix and then Z-bus matrix is modified, which allows the real power loss of the network to be expressed in terms of generator or load currents. The modified Z-bus method provides the opportunity to allocate total losses to both generators and loads separately. This is while common Z-bus method is only capable of allocating losses to equivalent injected current at each bus. An example, with a six-bus test system is used to illustrate the main steps of the proposed allocation strategy, and numerical results obtained with the IEEE 14-bus system are used to assess the quality of loss allocation procedure.

Rescheduling of power systems constrained with transient stability limits in restructured power systems

This paper investigates various approaches to relieve the transient stability constraint in restructured power systems. The approaches adopted fall into two broad categories: those based on eliminating the constraint in the least-cost way and those based on eliminating with the least possible rescheduling. The latter group can, on the other hand, emerge in the form of a pool-protected policy in which the bilateral contracts are rescheduled to maintain the stability or in the form of a contract-protected policy in which the realizable bilateral contracts are maximized while minimizing the rescheduling in pool market. Transient energy function (TEF) method is used as a tool to calculate the sensitivity of energy margin to the variations in the magnitude of generation and load. The effectiveness of the method is illustrated by case studies on Western System Coordinating Council (WSCC) 3-machine 9-bus power system and on the 10-machine 39-bus New England test system and the results are compared. The results are also verified by time domain simulations.

Labor Market Pooling and Occupational Agglomeration

This paper examines the micro-foundations of occupational agglomeration in U.S. metropolitan areas, with an emphasis on labor market pooling. Controlling for a wide range of occupational attributes, including proxies for the use of specialized machinery and for the importance of knowledge spillovers, we find that jobs characterized by a unique knowledge base exhibit higher levels of geographic concentration than do occupations with generic knowledge requirements. Further, by analyzing co-agglomeration patterns, we find that occupations with similar knowledge requirements tend to co-agglomerate. Both results provide new evidence on the importance of labor market pooling as a determinant of occupational agglomeration.

Risk Management in the Cooperative Contract

Agricultural cooperatives have long played an important role in helping their members manage risk. Yet the typical cooperative (co-op) does a much better job of helping its members manage some sorts of risk than it does others. In particular, co-ops are good at helping members manage marketing risk, or idiosyncratic variation in prices observed within the course of a single season. However, agricultural cooperatives seem not to be particularly good at helping their members to manage production risk, which involves variation in yield over the course of several years. This paper argues that by taking advantage of the multi-year nature of most members’ relationship with the cooperative, the cooperative can also provide a useful (though limited) form of insurance against crop shortfalls. Agricultural producers face various sorts of risk; some of these are difficult to manage using standard institutions. Agricultural cooperatives can play an important role in helping their members to manage these sources of risk. For example, marketing co-ops traditionally help to reduce price risk by pooling sales across time and space, and could reduce production risk by making some payments to members on the basis of predetermined shares, rather than on actual delivery or “patronage.” However, just because a cooperative can help its members manage risk does not mean that membership in a cooperative will serve as a useful means for dealing with risk. The details of a cooperative’s by-laws, management of equity, mechanisms governing the transfer of delivery rights, methods of capitalization, pooling rules, and expansion options can all have a big impact on the usefulness of the cooperative structure as a risk-management tool for users. Here, we provide an enumeration of some different sorts of shocks which may be important to agricultural producers and then describe the manner in which a typical cooperative market pooling mechanism

Novel transmission pricing scheme based on point-to-point tariff and transaction pair matching for pool market

Transmission pricing scheme is a key component in the infrastructure of power market, and pool is an indispensable pattern of market organization; meanwhile, pay-as-bid (PAB) serves as a main option to determine market prices in pool. In this paper, a novel transmission pricing scheme is proposed for pool power market based on PAB. The new scheme is developed by utilizing point-to-point (PTP) tariff and introducing an approach of transaction pair matching (TPM). The model and procedure of the new scheme are presented in detail. Apart from the advantages of existing transmission pricing schemes, such as ensuing open, fair and non-discriminatory access, proper recovery for investment as well as transparency, the new scheme provides economic signals to promote the maximum use of the existing transmission network, encourages appropriate bidding behaviors in pool, and helps to reduce the possibility of the enforcement of market power and the appearing of price spikes; thus improves market operation efficiency and trading effects. In order to testify the effectiveness of the proposed scheme, a case based on IEEE 30-bus system is studied.

Labor Market Pooling and Human Capital Investment Decisions

Labor market pooling is considered one of the advantages of agglomerations. This paper presents a model of human capital formation in an imperfectly competitive, pooled local labor market with heterogeneous workers and firms. Firms produce with different technologies requiring diverse skills. Workers specialize into specific skills and accumulate general human capital. While labor market pooling provides static efficiency gains, our results also imply positive long-term effects: Under a diversified structure, firm-specific shocks increase workers' incentives to acquire both general and specific human capital. This not only raises productivity but also strengthens a region's capability to adapt to change.

Derivatives on Non-Storable Renewable Resources: Fish Futures and Options, Not so Fishy After All

We study forwards and European call options, which are written on a non-storable renewable resource. Examples of such derivatives in form of futures on fresh catch of wild salmon for the US and the recently created Fish Pool market in Norway, where futures on a composite of wild catch and farmed salmon are traded, will be discussed. We approach the problem of pricing these contracts from first principles, starting off by modelling the dynamics of the resource reserves, and assuming that in approximation resource extraction is managed as open access. We derive formulas for the forward price of the renewable resource as well as European call options written on it.

Labor Market Pooling, Outsourcing and Labor Contracts

Economic regions, such as urban agglomerations, face external demand and price shocks that produce income risk. Workers in large and diversified agglomerations may benefit from reduced wage volatility, while firms may outsource the production of intermediate goods and realize benefits from Chamberlinian externalities. Firms may also protect workers from wage risks through fixed wage contracts. This paper explores the relationships between firms’ risks, workers’ contracts, and the structure of production in cities.

Spatial Distribution of Manufacturing Activity and its Determinants: A Comparison of Three Small European Countries

Barrios S., Bertinelli L., Strobl E. and Teixeira A. C. Spatial distribution of manufacturing activity and its determinants: a comparison of three small European countries, Regional Studies. The paper investigates and compares the spatial distribution of manufacturing activity and its determinants in Belgium, Ireland, and Portugal using comparable, exhaustive micro-level data sets. Some similarities are found between Portugal and Belgium, but little for Ireland. Moreover, there is some evidence that forward and backward linkages, research and development activity, and labour market pooling of skilled labour can be important determinants of agglomeration, although this crucially depends on the country examined. Barrios S., Bertinelli L., Strobl E. et Teixeira A. C. Répartition spatiale des activités manufacturières et de leurs déterminants: comparaison de trois petits pays européens, Regional Studies. Dans cet article, nous analysons et nous comparons la répartition spatiale des activités manufacturières et de leurs déterminants en Belgique, en Irlande et au Portugal, en utilisant des ensembles exhaustifs de microdonnées comparables. Nous trouvons des similitudes entre le Portugal et la Belgique mais peu pour l'Irlande. De plus, il s'avère que des liens avant et arrière, d'activités de R&D et de mise en commun du marché des emplois qualifiés peuvent être des déterminants importants d'agglomération bien que cela dépende étroitement du pays analysé. Agglomération Autocorrélation spatiale Belgique Irlande Portugal Barrios S., Bertinelli L., Strobl E. und Teixeira A. C. Die räumliche Verteilung von produzierender Arbeit und ihren Determinanten: ein Vergleich zwischen drei kleinen europäischen Staaten, Regional Studies. Wir untersuchen und vergleichen die räumliche Verteilung von produzierender Arbeit und ihren Determinanten in Belgien, Irland und Portugal mit Hilfe von vergleichbaren, umfassenden Datensätzen auf Mikroebene. Wir stellen einige Ähnlichkeiten zwischen Portugal und Belgien fest, jedoch wenige für Irland. Darüber hinaus weist einiges darauf hin, dass die Vorwärts- und Rückwärtsverbindungen, die Forschungs- und Entwicklungsarbeit sowie die Konzentration von Fachkräften auf dem Arbeitsmarkt wichtige Determinanten für eine Agglomeration darstellen können, wobei dies aber im Wesentlichen vom jeweils untersuchten Land abhängt. Agglomeration Räumliche Autokorrelation Belgien Irland Portugal Barrios S., Bertinelli L., Strobl E. y Teixeira A. C. Distribución espacial de la actividad manufacturera y sus determinantes: comparación entre tres pequeños países europeos, Regional Studies. Con ayuda de un grupo de datos comparables y exhaustivos a nivel micro, investigamos y comparamos la distribución espacial de la actividad manufacturera y sus determinantes en Bélgica, Irlanda y Portugal. Observamos algunas similitudes entre Portugal y Bélgica pero pocas con Irlanda. Asimismo existen evidencias de que los vínculos hacia delante y atrás, la actividad de I + D y la concentración de mano de obra cualificada en el mercado laboral pueden ser determinantes importantes de aglomeración si bien esto depende básicamente del país que sea analizado. Aglomeración Autocorrelación espacial Bélgica Irlanda Portugal

Urban Economies and Productivity

Productivity levels and productivity growth rates vary significantly over space. These differences are perhaps most pronounced between countries, but they remain acutely evident within national spaces as economic growth favors some cities and regions and not others. In this paper, we map the spatial variation in productivity levels across Canadian cities and we model the underlying determinants of that variation. We have two main goals. First, to confirm the existence, the nature and the size of agglomeration economies - that is, the gains in efficiency related to the spatial clustering of economic activity. We focus attention on the impacts of buyer-supplier networks, labour market pooling and knowledge spillovers. Second, we identify the geographical extent of knowledge spillovers using information on the location of individual manufacturing plants. Plant-level data developed by the Micro-economic Analysis Division of Statistics Canada underpin the analysis. After controlling for a series of plant and firm characteristics, analysis reveals that the productivity performance of plants is positively influenced by all three of Marshall's mechanisms of agglomeration. The analysis also shows that the effect of knowledge spillovers on productivity is spatially circumscribed, extending, at most, only 10 km beyond individual plants. The reliance of individual businesses on place-based economies varies across the sectors to which the businesses are aggregated. These sectors are defined by the factors that influence the process of competition - access to natural resources, labour costs, scale economies, product differentiation, and the application of scientific knowledge. Neither labour market pooling, buyer-supplier networks nor knowledge spillovers are universally important across all sectors. This paper provides confirmation of the importance of agglomeration, while also providing evidence that external economies are spatially bounded and not universally important across all industries.

Agglomeration Economies: Microdata Panel Estimates from Canadian Manufacturing

Productivity and wages tend to be higher in cities. This is typically explained by agglomeration economies, which increase the returns associated with urban locations. Competing arguments of specialization and diversity undergird these claims. Empirical research has long sought to confirm the existence of agglomeration economies and to adjudicate between the models of Marshall, Arrow and Romer (MAR) that suggest the benefits of proximity are largely confined to individual industries, and the claims of Jacobs (1969) that such benefits derive from a general increase in the density of economic activity in a particular place and are shared by all occupants of that location. The primary goal of this paper is to identify the main sources of urban increasing returns, after Marshall (1920). A secondary goal is to examine the geographical distance across which externalities flow between businesses in the same industry. We bring to bear on these questions plant-level data organized in the form of a panel across the years 1989 and 1999. The panel data overcome selection bias resulting from unobserved plant-level heterogeneity that is constant over time. Plant-level production functions are estimated across the Canadian manufacturing sector as a whole and for five broad industry groups, each characterized by the nature of their output. Results provide strong support for Marshall's (1920) claims about the importance of buyer-supplier networks, labour market pooling and spillovers. The data show spillovers enhance plant productivity within industries rather than between them and that these spillovers tend to be more spatially extensive than previous studies have found.

Generation Expansion Planning in pool market: A hybrid modified game theory and improved genetic algorithm

Unlike the traditional policy, Generation Expansion Planning (GEP) problem in competitive framework is complicated. In the new policy, each Generation Company (GENCO) decides to invest in such a way that obtains as much profit as possible. This paper presents a new hybrid algorithm to determine GEP in a Pool market. The proposed algorithm is divided in two programming levels: master and slave. In the master level a Modified Game Theory (MGT) is proposed to evaluate the contrast of GENCOs by the Independent System Operator (ISO). In the slave level, an Improved Genetic Algorithm (IGA) method is used to find the best solution of each GENCO for decision-making of investment. The validity of the proposed method is examined in the case study including three GENCOs with multi-type of power plants. The results show that the presented method is both satisfactory and consistent with expectation.

The role of compressed air energy storage (CAES) in future sustainable energy systems

Future sustainable energy systems call for the introduction of integrated storage technologies. One of these technologies is compressed air energy storage (CAES). In Denmark at present, wind power meets 20% and combined heat and power production (CHP) meets 50% of the electricity demand. Based on these figures, the paper assesses the value of integrating CAES into future sustainable energy systems with even higher shares of fluctuating renewable energy sources. The evaluation is made on the basis of detailed energy system analyses in which the supply of complete national energy systems is calculated hour by hour in relation to the demands during a year. The Danish case is evaluated in a system-economic perspective by comparing the economic benefits achieved by improving the integration of wind power to the costs of the CAES technology. The result is compared to various other storage options. Furthermore, a business-economic evaluation is done by calculating the potential income of the CAES technology from both spot markets and regulating power markets. The evaluation includes both historical hour by hour prices during a 7-year period on the Nordic Nord Pool market as well as expected future price variations. The conclusion is that even in energy systems with very high shares of wind power and CHP, neither the historical nor the expected future price variations on the spot market alone can justify the investment in CAES systems. Other storage technology options are significantly more feasible. CAES may operate both on the spot market and the regulating power market, which indicates potential feasibility. However, such strategy is highly risky because of the small extent of the regulating power market and if CAES is to become feasible it will depend on incomes from auxiliary services.