Retail Electricity Market Research Articles

The impact of end-user market integration and the smart grid on electricity retailers in the Nordic region

The Nordic end-user market for electricity has recently been the subject of significant changes. The energy authorities within the Nordic countries have been working intensively to create a fully operational common electricity retail market, and all customers were due to have smart meters installed by the end of 2019. These changes are of particular concern for the suppliers of retail electric power, as competition will increase and the retail products and offers related to the smart grid and specific customers’ needs will gain importance. With the help of a mixed complementarity problem formulation that describes a simplified market setting with two competing retailers, we analyze the impact of the pending market changes on electricity retailers’ price markup and profit.

An Evolutionary Game for Analyzing Switching Behavior of Consumers in Electricity Retail Markets

An Evolutionary Game for Analyzing Switching Behavior of Consumers in Electricity Retail Markets

Bi-level optimal low-carbon economic dispatch for an industrial park with consideration of multi-energy price incentives

Under the retail electricity market reform and the development of demand-side integrated energy systems in China, the Integrated Energy Service Agency (IESA) is responsible for purchasing energy from the external market and supplying it to multi-energy users (MEUs). However, with the increase in the types of MEUs, the IESA has gained more sales options. How to meet the required MEU participation level in the integrated demand response (IDR) plan to ensure that the IESA sets the optimal integrated energy price is an urgent problem. In this paper, a bi-level optimal low-carbon economic dispatch model for an industrial park is proposed considering multi-energy price incentives; at the upper level, the model takes the optimal net income of the IESA as the target, and the carbon emission constraints of the real-time unit integrated energy supply are considered, so that the IESA can reasonably dispatch a comprehensive energy supply, optimize the operation of energy conversion equipment, and set reasonable energy selling prices based on energy prices in the external market. At the lower level, the model takes the minimum integrated energy cost to MEUs as the goal. MEUs take the initiative to obtain retail energy price signals, formulate optimal multi-energy use strategies, and actively participate in the IDR plan. At the same time, coordination between the upper and lower levels helps to optimize the price of the energy sold and the power used by the IDR and is therefore used to achieve the overall environmental and economic requirements of the industrial park. The prime dual path following the interior point method is used to solve the nonlinear, multidimensional, and double-iterative optimization model, and three typical examples are used to illustrate that the model and method can improve the net income of the IESA, ensure the economic and environmental protection of the cooperative multi-energy operation, and encourage MEUs to actively participate in the IDR plan.

Research on information disclosure strategies of electricity retailers under new electricity reform in China

The Chinese government has issued “No.9 document” to start a new round of reform. Retail competition mechanism has been launched and more participants are encouraged to involve into the sell side. However, the electricity retail market is still imperfect and needs continuously improving at current stage, in which information disclosure mechanism is of great significance. This paper analyzes and compares the information disclosure strategies of power retailers under new electricity reform in China. The results show that the retail companies with better service quality are more inclined to disclose information, while sellers with poor service quality tend to hide information. Information non-transparency will result in some inefficiencies inevitably and perfect information disclosure system is expected to promote competition, thus ensuring market fairness. These findings may provide some references for the future development of the electricity retail market and electricity reform.

Deep Q-Network Based Energy Scheduling in Retail Energy Market

As a significant component of electric energy trades, retail electric market (REM) can effectively alleviate the pressure of load demand from the power grid. However, the load demand uncertainty of customers becomes a nodus because retail electricity providers (REPs) should predict the load demand when trading with wholesaler electricity provider (WEP) based on the interaction. Therefore, in this paper, we propose an optimal energy scheduling scheme in REM with consideration of the influence of decisions made in pre-purchase stages to situations in real-time stages. Firstly, we present a trading framework to analyze the strategies of REPs in REM, in which REPs conduct both pre-purchase trading with WEP, and real-time trading with customers. Then, to solve the scheduling problem caused by the demand uncertainty of customers, we design a power allocation mechanism based on the charging demand degree, by which REPs can minimize the operating cost while ensuring that each electric vehicle can be charged with sufficient energy. Next, to minimize the cost of REPs in the pre-purchase stage, we adopt deep Q-network (DQN) algorithm to implement the pre-purchase schedule. The charging station adjusts the pre-purchased schedule for each period through Q-learning and utilizes the optimal strategy to design the electricity schedule. Finally, simulation experiments show that the proposal can obtain the optimal strategy to significantly reduce the operating costs of REP.

Loyalty Taxes in Retail Electricity Markets: Not as They Seem?

A common view in retail electricity markets is that retailers discriminate based on consumers’ loyalty: loyal consumers pay more. The premium is colloquially known as a “loyalty tax” or “loyalty premium”. Reflecting this understanding Australia’s governments, regulators and consumer advocates have encouraged consumers to switch electricity retailers. Using a sample of 47,114 household electricity bills we test whether consumers that had switched in the previous 12 months (“switchers”) pay less than consumers who remained with their retailers (“remainers”) in the previous 12 months. We find that the annual bills of switchers are expected to be AU$48 (4%) lower than remainers and that the median switcher could reduce their bills by 21% by selecting the cheapest offer. Classifying retailers into tiers however provides some nuance to the main conclusion: the third tier of retailers (the new entrants with market shares of less than 3%) impose higher loyalty taxes than the other two tiers (incumbents and midsized retailers). The middle tier of retailers impose the lowest loyalty tax, in fact for many consumers they may reward loyalty. These findings suggest the loyalty tax is (typically) smaller than widely considered, that it varies across tiers of retailers and that even engaged consumers typically do not select the lowest priced offers. This raises the question of whether switchers are motivated by lower bills as well as other factors or whether the main challenge is difficulties in search.

Electricity demand management within the retail electricity market in Russia

The article is devoted to the problem of managing the demand for electricity consumption within the framework of the retail electricity market in Russia. The author identifies and summarizes the existing demand management tools. The article substantiates the need for the development and implementation of innovative tools and mechanisms for managing the demand for electricity consumption.

ЭКОНОМИЧЕСКОЕ ПОВЕДЕНИЕ ПОТРЕБИТЕЛЕЙ В УСЛОВИЯХ СОВРЕМЕННЫХ ВЫЗОВОВ В ПОРЕФОРМЕННЫЙ ПЕРИОД РАЗВИТИЯ ЭЛЕКТРОЭНЕРГЕТИКИ РОССИИ

The article examines the consequences of the reform of the Russian electric power industry, which resulted in the formation and operation of: wholesale electricity markets in the European part of the country, including the Urals, and in Western Siberia; the system of state-owned companies transporting electricity; and the aggregate of market platforms for the retail electricity market. New phenomena are analyzed, in particular: the emergence of vertically integrated companies coordinating the production and combustion of fossil fuels in power plants; the emergence of competition in the heat market from the side of heat generating plants, which led to financial losses for the existing CHP plants that are part of heat generating companies - participants in the wholesale electricity market; the withdrawal of some heat consumers from the market and the construction of their own heat generating plants; failure to create a competitive retail electricity market. Measures are proposed to prevent the negative consequences of the detected phenomena.

Technical and Economic Analysis of Residential Photovoltaic Distributed Generation: Net Billing and Self-consumption in Peru

In Germany, Spain, Italy and other European countries, the promotion and development of distributed residential photovoltaic (PV) generation markets has been based mainly on the mechanism of regulated premiums by kWh generated - Feed in Tariff. The United States has employed the net metering mechanism. Both mechanisms have determined the price of the electricity injected to the grid energy be equal or higher than the grid electricity tariff. The accelerated cost reduction of PV technology has allowed, in diverse electricity markets, Grid parity. This circumstance has driven the revision and reformulation of the promotion mechanisms for distributed PV generation. This paper is to development to evaluate the net billing and self-consumption mechanism and the impact on the business sustainability of the electricity distribution company (DSO); as well as the economic incentive for the residential user to become prosumer. The mechanism has applied to the electricity retail market of Arequipa, located in southern Peru, with a specific solar potential higher than 2000 kWh/kWp. The results showed that: The subsidized electricity tariff for consumer less than 100 kWh/month, would not reach full grid parity before 2020. For consumer of higher than 100 kWh/month, the net billing and self-consumption mechanism allows the promotion of distributed PV generation. In addition, the under net billing, DOS would maintain their business sustainability. Finally, under the net billing mechanism the user will have the incentive not to oversize the grid-connected PV power

Applicability Evaluation of China’s Retail Electricity Price Package Combining Data Envelopment Analysis and a Cloud Model

With the reform of the power system, the retail electricity market in China has gradually been liberalized. The mechanism of freely selling electricity have been set up. To grab market share and increase profits, electricity retail companies have introduced a series of retail electricity price packages. To evaluate the applicability of these retail electricity price packages, an adaptive evaluation index system that takes into account the interests of both the power company and the users is first established. Furthermore, an integrated evaluation model that combines data envelopment analysis (DEA) and the cloud model is proposed. In this model, DEA is used to process quantitative indicators and the cloud model is employed to quantify qualitative problems. A case study of Tianjin is conducted to verify the effectiveness of the proposed evaluation system and model. The empirical study shows that qualitative indicators can also affect the applicability of the retail electricity price packages, and the applicability of the retail electricity price package was different in different seasons. Finally, several reliable suggestions on how to design retail electricity price packages are given based on the research. This study provides useful support for customers to choose the price package to increase the competitiveness of power selling companies and ultimately promote the reform of power selling.

Managing the liberalization of Italy's retail electricity market: A policy proposal☆

Italy will phase out electricity retail price regulation by July 1st, 2020. Until then, residential customers and small businesses who do not choose their supplier are served under a regulated tariff named “maggior tutela” (greater protection), supplied by the local distributor at a price set by the regulator. We review the literature on electricity retail competition – with particular regard to its expected effects on prices, innovation, and customer engagement – and the conditions under which competition is expected to deliver benefits. We perform a Structure-Conduct-Performance analysis of Italy's retail electricity market for residential customers, finding two issues potentially problematic: excessive market concentration and low customer engagement. We propose a phase-out mechanism that relies on graduality, asymmetric regulation, and a mandatory, opt-out collective switching exercise. The mechanism aims to rapidly reduce market concentration by leveraging behavioral incentives to customers to switch to the cheapest supplier.

The impact of renewable portfolio standard on retail electricity market: A system dynamics model of tripartite evolutionary game

The renewable portfolio standard (RPS) in China is to put into effect at the beginning of 2020, which will inevitably affect the strategy of stakeholders in retail electricity market. To study the effect of RPS on retail electricity market, we take the regulators (energy regulatory authorities) and two types of power sales companies with heterogeneous strength into consideration. Then a system dynamics model of tripartite evolutionary game is developed to analyze the strategy interaction of stakeholders and simulate the corresponding evolution process. Based on the background of Chinese renewable power industry, the scenario analysis method is employed to investigate the impacts of key parameters in relation with RPS scheme on stakeholders’ strategy selections. The results show that, to basically ensure all the power sales companies comply with quota obligation, TGC price of different stages should maintain at desired levels, net profit of renewable power sales should be no less than that of conventional power sales, and incentive and punishment should be within a reasonable range. In particular, the results reveal some policy effects such as reversal effect, blocking effect and over-reliance effect. More importantly, these results provide some policy recommendations for the rapid development of renewable power industry.

Forming Rate Options for Various Types of Consumers in the Retail Electricity Market by Solving the Adverse Selection Problem

ABSTRACTThis paper is concerned with the game theoretic mechanisms of interaction between a load serving entity and several types of power consumers (with elastic and inelastic demand). The main focus is on the bounded rational and fully rational consumers, and respective utility functions are defined for them. The demand-side management (DSM) principles are used to analyze the load at different times of the day for different types of consumers. The proposed statement allows the formulation of coordinated prices in rates for different types of consumers, and optimization of demand: peak load decreases relative to a daily average one. The problem is reduced to a convex optimization problem that has a unique solution in the presented form. The obtained result is in the form of a separating equilibrium (when different consumers choose different rates), which brings the retail market equilibrium closer to the maximum public welfare.

A Business Model Incorporating Harmonic Control as a Value-Added Service for Utility-Owned Electricity Retailers

With the deepening of electricity market reform in China, the competition in the electricity retail market becomes increasingly intense. Electricity retailers (ERs) need to explore new business models to enhance their competitiveness in the retail market. Meanwhile, with the improvement of industrial production and people's living standards, more and more nonlinear electrical equipment have been put into use, leading to severe harmonic pollution problems. Harmonic pollution causes loss of electricity, resulting in the economic loss of customers, especially for large industrial customers. In the above contexts, this paper proposes a novel business model that incorporates harmonic control as a value-added service into electricity retail contracts for utility-owned ERs. Both utility-owned ERs and customers can benefit from the designed business model. For customers, it helps them to improve the power quality while saving the electricity cost. For ERs, it helps them to cultivate the customer loyalty and improve the customer satisfaction. A case study is performed to demonstrate the effectiveness of the proposed business model.

A population‐based approach to the bi‐level multifollower problem: an application to the electricity retail market

AbstractDynamic tariffs are expected to be implemented as commercial offers of electricity retailers in smart grids, conveying price signals aimed at shaping usage patterns, with potential benefits to enhance grid efficiency and reduce end‐users’ costs. Retailers and consumers have divergent goals. While the objective of the retailer is to maximize profits, the purpose of consumers is to minimize their electricity bill. The interaction between the retailer and consumers can be modeled by means of bi‐level (BL) programming: the retailer sets the prices to be charged to consumers and these react by scheduling flexible appliances according to those prices and their comfort requirements. In this work, two hybrid BL optimization approaches are proposed to solve this problem, considering one leader (retailer) and multiple followers (consumers). Two population‐based approaches were developed, a genetic algorithm (GA) and a particle swarm optimization (PSO) algorithm, to deal with the upper level problem, both encompassing an exact mixed‐integer linear programming solver to address the lower level optimization problem. Different scenarios were generated, comprising one leader (retailer imposing different price schemes) and three followers (with different consumer profiles). Typical residential appliances were considered, with different operation cycles. Also, diverse tariff structures set by the retailer were analyzed. The performance of the two algorithms was compared. Results revealed a consistent superiority of PSO over GA.

Asymmetric price transmission in the Hungarian retail electricity market

The article compares the market power of Hungarian electricity traders during the partially liberalised transitional market model from 2004 to 2008 and the fully liberalised period lasting since 2008. In our empirical work, we use an econometric modelling technique based on asymmetric price transmission (APT) theory to measure the market power of traders in the electricity market. The aim of our work is to conduct a quantitative analysis of the Hungarian electricity trading market by applying the APT modelling technique – used widely in agro-economic analyses – to electricity markets. The intuition behind the method is the assumption that asymmetric price transmission refers to deviations from perfect competition. The research has found that different regulation regimes lead to different patterns of asymmetry in price transmission and the results underline that the market position of electricity traders have improved since the introduction of the liberalised market model. By mapping the results of the APT model to the actual policy and market changes we argue that the APT method is a useful tool for analysing the competition on electricity markets.

Optimization of the daily load schedule with the help of energy storage device in order to ensure compliance with the declared tariff price category in the retail electricity market

This paper is devoted to the analysis of electricity consumption by a real enterprise in Western Siberia and the development of recommendations for optimizing its electricity consumption in the context of the tariff policy for the region. The paper discusses the possibility of using energy storage device to reduce the maximum power consumption by organizing charge and discharge cycles of the drive in certain periods of the day. During minimum power consumption, the daily load curve is levelled due to the process of charging the drives. The energy is released into the circuit at the maximum power consumption of the enterprise, reducing its peak load. Aligning the daily schedule of the projected power consumption allows selecting a price category with a lower tariff rate when applying for technological connection. It is concluded that the use of energy storage device for saving for these purposes is unprofitable, since the payback period of the drive significantly exceeds its service life. It is noted that a possible area of application of energy storage device includes enterprises where process violations lead to significant economic damage, the minimization of which justifies the use of expensive energy storage devices.

European Union retail electricity markets in the Green Transition: The quest for adequate design

AbstractAfter a gradual process of reforms, retail electricity markets in Europe are well established. In parallel, the decarbonization agenda and rapid technological progress lead the way toward a renewable‐based and distributed electricity system, in which new business models emerge. Distributed resources, prosumers, and peer‐to‐peer trading are all part of the most likely future scenarios. The newly adopted Clean Energy Package, put forward by the European Commission in 2016, responded to the consensus that existing electricity markets needed to adapt and aimed at putting consumers at the center. But will the ongoing reforms live up to the challenges posed by the coming stages of the ongoing Green Transition? While most recent analyses focus on wholesale issues, the present review narrows this gap. We analyze the European Union (EU) retail electricity market design in isolation, but also in its interaction with the renewable energy policy. We compare the current and the forthcoming legislative framework to elucidate if the recently adopted reforms mitigate conflicts or facilitate complementarities arising from the implementation of the European energy policy framework. While the reforms remove fundamental barriers for consumer participation, several unresolved conflicts remain. Thus, looking forward, there is a significant implementation challenge. Among these are the overdue task of making competition effective, striking the right balance between the verticality and horizontality of the future retail market and confronting market reconfiguration. In this respect, the paper makes several policy recommendations aimed at EU Member States, which are also valid for any jurisdiction willing to advance a transition to renewables.This article is categorized under: Energy and Climate > Economics and Policy Energy Systems Economics > Economics and Policy Energy Policy and Planning > Economics and Policy

Estimation of time series urban energy demand and Examination of optimal energy supply system

From the background of the liberalization of electricity and city gas retail market, it is considered that in the future Japan will move to a distributed supply form from each building and household. In order to properly place and operate this decentralized supply facility in the city, knowledge of time-series demand fluctuation in urban scale is necessary, but since there is no data or estimation method corresponding to this, it is necessary to develop one.In this research, we first developed a program to estimate the energy demand fluctuation at five-minute intervals of non-residential buildings in urban scale into four energy applications (electricity, cooling, heating, and hot water supply). First, we acquire the building information (usage, extended floor, and coordinates) of the target city by GIS (Geographic Information System) data. Based on this data, we predict the demand fluctuation by building as a reference. By distributing the value, using probability density based on statistical and measurement data, we reproduced the variation of demand due to the difference of building characteristics which cannot be obtained via GIS data. We estimate the demand fluctuation for a city by integrating the building-specific demand fluctuation estimation values.In this paper, the calculation was carried out using a program for Fukuoka city, Tenjin and Hakata districts, and the estimation result was compared and verified.Based on the data obtained by the urban energy demand estimation program, we will consider optimal placement and operation methods of distributed supply equipment typified by PV panel, cogeneration, and storage battery. By flagging the presence or absence of equipment for each building and calculating it, we compared and examined the amount of energy reduction in each pattern.

Indirect Customer-to-Customer Energy Trading With Reinforcement Learning

In this paper, we explore the role of emerging energy brokers (middlemen) in a localized event-driven market (LEM) at the distribution level for facilitating indirect customer-to-customer energy trading. This proposed LEM does not aim to replace any existing energy service or become the best market model; but instead to diversify the energy ecosystem at the edge of distribution networks. In light of this philosophy, the market mechanism will provide additional options for customers and prosumers who have the willingness to directly participate in the retail electricity market occasionally, on top of using existing utility services. It also helps in improving market efficiency and encouraging local-level power balance, while taking into account the characteristics of customers’ behavior. The energy trading process will be built as a Markov decision process with some reinforcement learning and data-driven methods applied. Some economic concepts, like search friction , related to this kind of typical search cost involved market model are also discussed.