Single Buyer Model Research Articles

A peer-to-peer energy trading market framework for single buyer model: An integration of decentralised finance instruments and cooperative game model

Single Buyer (SB) model has gained traction in many Southeast Asia, Middle Eastern, and North African countries for its blend of centralisation and controlled competition. The semi-liberalised regulatory environment has hindered the integration of cogeneration or combined heat and power (CHP) as a prosumer within the electricity value chain, despite its pivotal role in enhancing energy efficiency. There is a disconnection in the existing literature as electric supply configurations and enablement of peer-to-peer (P2P) electricity trading are individually studied. There also lacks the studies addressing electricity as a special commodity and its compatibility with the market. This paper bridges the research gaps by proposing a P2P energy trading market framework that integrates decentralised finance (DeFi) instruments and a cooperative game model. Malaysia, which implements the SB model in its electric supply structure, is selected for a case study. The comprehensive framework develops (1) a stableswap hybrid function automated market maker (HFMM) decentralised exchange (DEX) for P2P trading, (2) a mixed-integer linear programming (MILP) optimisation model to determine the optimal operational strategy with minimised total annualised cost (TAC) of the system, and (3) an allocation scheme based on a cooperative game model to gauge the individual and coalitional cost savings allocations. Overall, this study presents a novel approach to addressing the challenges with innovating the SB model, while also fostering competitions among prosumers. The SB structure of Malaysia is briefly inspected, and the proposed framework is expected to contribute to the growth of macro-level CHP integration in the nation's energy planning.

A Single-Buyer Model of Imbalance Cost Pass-Through Pricing Forecasting in the Malaysian Electricity Supply Industry

The imbalance cost pass-through (ICPT) is a flexible component of the incentive-based regulation (IBR) that empowers power producers to adjust tariffs in response to variable fuel prices, thereby enhancing the economic resilience of electricity generation. In Malaysia, the Energy Commission has conducted biannual reviews of fuel and other generation costs. Any cost savings or increases identified during these reviews will be passed on to customers in the form of rebates or surcharges. Meanwhile, if an increment in the ICPT price signal can be provided to electricity providers and consumers, early preparation for operation budgeting can be realised, and energy management program development can be properly prepared. Due to this reason, this study proposes ICPT price forecasting for the electricity market in Peninsular Malaysia that will benefit the stakeholders. The study aims to construct an ICPT-related baseline model for the peninsular generation data by employing three forecasting methods. The forecasting performance is analysed using the mean absolute percentage error (MAPE). In light of our findings, the ARIMA method is one of the most accurate forecasting methods for fuel prices compared to the moving average (MA) and LSSVM methods. The observed price differences between the ARIMA and LSSVM models for ICPT are minimal. The ICPT price for July–December 2022 and January–June 2023 is MYR 0.21/kWh for the ARIMA and MYR 0.18/kWh for LSSVM, which are close to the actual TNB’s ICPT tariff. As for forecasting, the ICPT price is expected to drop in the next announcement. The findings of this study may have a positive impact on the sustainability of the energy sector in Malaysia.

Концептуальні аспекти та принципи формування конкурентних ринків теплоенергії

Thermal energy should be considered as a commodity that has its own competitive market, where equilibrium is established in the plane of «supply and demand», so it is necessary to separate commercial (production and supply) and non-commercial (transmission and distribution) functions of heat supply, ensuring the development of fair competition between producers of heat energy and minimization of its costs for consumers. It is proposed to develop competition in the heat energy markets according to the single buyer model. Such a market will be managed by an independent system operator. It consists of a market operator – a single buyer who manages the trading platform, as well as performs the functions of an administrator of settlements between producers and consumers, and a transmission system operator who is responsible for the transmission, distribution and dispatching of heating networks. The peculiarity of heat energy markets is the impossibility of separating the wholesale and retail levels, so there is no need to allocate the supply function. Conceptual provisions for the formation of competitive heat energy markets are based on: 1) zonal delimitation with flow market relations; 2) centralized dispatching; 3) the embodiment of the market infrastructure by an independent system operator; 4) organized over-the-counter trading in the form of a price dialogue for small settlements without backbone networks and exchange trading in the form of heat auctions for medium and large settlements with backbone networks; 5) derivatives (annual), spot (monthly), and balancing segments of the market; 6) the uniform non-discriminatory pricing for consumers and declared pricing on the basis of benchmarking for producers; 7) annual baseload contracts, monthly peak load contracts, and balancing time contracts. The principles of formation of competitive heat energy markets are: transparency, openness, economic efficiency, fair access, competitiveness of producers, fair competition, price compromise, balance and reliability, decarbonization. The expected results of the opening of competition in the heat energy markets are: transparency of heat purchase and sale transactions; minimization of heat purchase prices by consumers; optimization of the utilization of heat-generating capacities of the heat and power system; promoting the development of highly efficient and low-carbon district heating. The latter is especially important from the point of view of restoring Ukraine's energy system after russian aggression, as priority should be given to independent heat producers who use renewable energy sources, have excess or waste thermal energy.

Rights to Own and Operate a Hydro Floating Solar Project in Thailand

This paper finds that the current electricity regulatory regime, established by the Energy Industry Act B.E. 2550 (2007), together with the current electricity industry structure—the enhanced single buyer model—serves as a favorable legal basis for a state electricity enterprise, especially the Electricity Generating Authority of Thailand (EGAT), to own and operate a hydro-floating solar project in Thailand. However, it argues that, despite their ability to obtain the relevant licenses under the Energy Industry Act B.E. 2550 (2007) as well as enter into power purchase agreements with state electricity enterprises or private customers, the rights of private hydro-floating solar project operators to own and operate a hydro-floating solar project on the surface of public water resources are undermined by uncertainty pertaining to the possessory right over the water surface of public water resources, as well as unfair or discriminatory practices concerning electricity network access.

Reconfiguration of Uganda's bulk network to accommodate a wholesale electricity market

Countries that have restructured their electricity markets to wholesale markets have had significant benefits, including reduced generation costs, lower transmission losses and better consumer prices. In these markets, generators are dispatched in such a way that the financial benefits of both generator owners (producer surplus) and consumers (consumer surplus) are maximized. Retailers and large-scale consumers transact directly with power producers in a spot market or through contracts at wholesale level. Uganda's current single-buyer market (in which generation companies sell their power to a single entity that in turn transmits and sells it to distribution companies) was introduced in 2001 after the transition from a vertically integrated monopoly model. The market is expected to evolve into a wholesale market as the next restructuring step. This paper investigates the performance of the Uganda bulk network in a wholesale electricity market environment as modelled in Power World simulator. It considers different operation scenarios and possible infrastructure enhancements required for improved performance. Results showed that in the wholesale market model, transmission energy losses fell from an average of 4.3% to 3.8% compared to the single-buyer model due to more efficient network utilization. The economic analysis showed that off-peak and peak prices in the wholesale market system were 68.6% and 13.5% lower than in the current market respectively. However, old high loss transmission lines contributed to higher energy prices at receiving nodes. Transmission congestion, whose cost is embedded in a Location Marginal Price, caused sharp increases in the market's prices; this was addressed by using the network reconfiguration technique.

Malaysia’s electricity market structure in transition

The Malaysian electricity industry evolved from a vertically integrated utility into a single-buyer model, which considered a precursor to deregulation and a competitive market. This study considers electricity sector reform in Malaysia and proposes a market structure for the industry. We focus on the single-buyer model and the pool model for the analysis with the recommendation on reform stages required to ensure a smooth and successful market transition. A smooth transition from regulated market into deregulated market will ensure market stability and sustainability of the energy market. It will also provide enough time for the market participants to adapt and transit from regulated to deregulated energy market.

Electricity rate redesign in an African context: getting ready for the prosumer age

The assumption that electricity consumers have no alternative but the grid for their electricity needs is currently being challenged by affordable Behind-The-Meter (BTM) technologies such as distributed PV systems and batteries. This shake-up has been well documented in liberalized power markets such as Europe, North America, and Australia. This paper looks at the regulatory implications of BTM technologies in Africa, where the power industry often follows the Single Buyer Model. Applying a game-theoretical model, we illustrate the impact of BTM technology adoption on different consumer classes under different end-user rate designs and BTM technology cost scenarios. In our analysis, we focus on the following regulatory metrics: cost efficiency, equity, and cost recovery. We find that with the increasing penetration of BTM technologies the popular volumetric increasing block tariff design leads to a regulatory trilemma between equity, the recovery of the integrated Distribution and Supply Companies’ (DISCOs) costs, and the recovery of the costs of the Single Buyer Entity, being responsible for the procurement of energy and the planning, dispatch, and the expansion of the transmission grid. We argue that it is important to transition to an end-user rate design with increased fixed charges. We propose that fixed charges be differentiated based on historical consumption, serving as a proxy for income. We offer several recommendations on how to overcome practical difficulties when implementing such charges. However, merely revising the end-user rate design might not be enough, the penetration of BTM technologies is an additional argument for wider reforms.

De-Regulation of Electricity Industry: A Malaysian Perspective

The Malaysian electricity industry has gone through an evolution over the years from vertically integrated utility into a single buyer market model currently. Many countries have de-regulated their electricity industry to increase efficiency and to introduce electricity price competitiveness. It is a natural path for any developing country like Malaysia to evolve into a fully functional market with complementary commercial instruments, such as whole-sale, balance, and network access arrangements. However, Malaysia must take the right path in pursuing de-regulation through energy market, thus ensuring a smooth transition from regulated into de-regulated electricity industry. This paper analyzed the energy market operation of three different countries. The analysis was based on the drivers for regulation, how the de-regulation was introduced to the vertically integrated system, the market model and the structure. From the comparative analysis, the hybrid model which combines single buyer model and pool market seems to be the potential approach for Malaysia in its path to de-regulation.

The generation revenue and demand payment assessment for pool based market model in Malaysia electricity supply industry

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.

ФІНАНСУВАННЯ ВІТЧИЗНЯНОЇ ГАЛУЗІ ТЕПЛОПОСТАЧАННЯ ШЛЯХОМ ВПРОВАДЖЕННЯ ПРОЄКТІВ ЕНЕРГОЕФЕКТИВНОСТІ В УМОВАХ ЄВРОІНТЕГРАЦІЇ

Within the article, scientific material on the topic under study is generalized, the idea that at the present stage there is an urgent need to reform the heat supply industry, unsatisfactory financial state of enterprises should be corrected, and measures on energy efficiency and its financing have to be introduced is substantiated. A number of key features of the basic models of the centralized heating market in the European Union is submitted, among which are the following: a single buyer model and an open grid model. Basic legal, economic and organizational principles of the activity of heat supply facilities in Ukraine are studied. Mechanisms for directing funds to energy efficiency have been established, differing in the source of funds and the number of parties involved in the process of allocating funds by the creditor before using them. The main projects financed by IMF are as follows: “Energy Efficiency Fund” (in the draft of the Government);“Municipal Infrastructure Development of Ukraine” - EIB (Loan Unbound) (KfW);”Energy Efficiency” (NEFCO); “Ukrsimbank and IBRD Project, IQ Energy” (EBRD, ESP, other); Demo-Ukraine (NEFCO), Environmental Friendly Net Production (NEFCO) and EBRD loans; Government program “Warm” loans”; preferential lending from the Youth Building Fund; direct bank lending. It is proved that the current methodology for the development of heat supply schemes needs refinement in order to provide local self-government bodies with a full and effective tool for long-term planning of the district heating supply.

Policy and Regulatory Environment for Private Investment in the Power Sector

Private investors respond to risk return tradeoffs. The policy environment and regulatory framework significantly influence risk as well as return in the power sector. Power sector reform and policy initiatives for enhanced private participation have been undertaken in a number of developing countries. The economic crisis faced by India in the early 90s led to opening up of the power sector for private investment there. Major policy initiatives were undertaken to encourage private and foreign investment. The investment climate was further strengthened by gradual restructuring of state electricity boards (SEBs) and regulatory reforms. More recently, the Electricity Act 2003 has enabled competition in the sector and improved the policy environment for private investment. Abolition of the single buyer model and phased access to consumers has opened substantial potential for private investment in the sector. The scale of private investment in the Indian power sector is not as encouraging as in the case of some reforming countries in Latin America and Asia. This paper undertakes a comparative analysis of the policy and regulatory environment in the power sector in Argentina, Brazil, People’s Republic of China, India, Mexico and Thailand. We find that the scope, pace and sequencing of the reform process has significant influence on private and foreign investment. Policy clarity and independent regulatory institutions reduce risk perception of investors as well as lenders.

Third-party access in district heating: Lithuanian case analysis

Transition from monopoly to competition-based markets is widely recognized processes around the globe when it comes to achieving efficient electricity and gas trade thus presenting direct benefits to the final energy consumers. But when talking about smaller infrastructures like district heating (DH) market is still viewed as a natural monopoly. This article presents Lithuanian case to open up existing municipal infrastructure to third-party access in order to complete fuel switch in DH generation faster and to increase efficiency of the entire system through competitive pressure. The article presents the set of circumstances in DH sector back in 2010; focuses on regulatory framework, which was developed and introduced through two phases in Lithuania; and formulates impacts of the reorganization of DH sector from vertically integrated monopoly to single buyer model for de-monopolized generation.

Market Clearing Mechanism Considering Congestion under Deregulated Power System

Deregulation in power industry involves restructuring of rules and regulations, set up by the government. The new scenario is brought into practice mainly as a result of privatization, together with the encouragement of innovation of new technology. These factors are expected to reduce the cost of electrical energy. Deregulation creates a platform called as power market where electricity is traded as a commodity. The power market can be single buyer, bilateral or poolco model. Under single buyer model, the market is cleared in a pool by conducting single sided auction among suppliers, for each time slot, for a predicted demand. Bilateral model allows suppliers and buyers to enter into contract for an amount of power during a time period. Under poolco model, the market is cleared by performing double sided auction that involves both suppliers and buyers. Once the market is cleared, market clearing price, in-merit suppliers and buyers with their allotted power, power flow through transmission line between areas are determined. However, the scheduling of power is not coordinated with transmission planning. This results in transmission congestion. One of the methods to negate congestion is to split the market at the predicted congestion bottleneck. This paper presents a real time market clearing hardware model that accepts auction data and clears the market considering transmission congestion. The proposed model uses raspberry pi board that performs market clearing based on offers and bids accepted from a created webpage. The transmission congestion is managed by splitting the market at the predicted congestion bottleneck. The effectiveness of the proposed model is tested on three area deregulated power system.

Search for a Market Equilibrium in the Oligopoly Heat Market

The paper considers a single-buyer model of the oligopoly heat market. A mathematical model of the heat market is developed. It allows us to take into consideration economic and technical aspects of heating system's operation. The problem of the determination of the Cournot-Nash equilibrium in the heat market at a linear demand function and nonlinear costs of heat sources is investigated and solved. To search for the Cournot-Nash market equilibrium we suggest an iterative algorithm based on step-by-step optimization of heat volumes produced by heat sources. The developed model was applied to perform practical studies on a heating system with two heat sources.

An integrated production-inventory model for deteriorating items with consideration of optimal production rate and deterioration during delivery

Most of the literature of single-vendor single-buyer integrated production-inventory models for deteriorating items assumed a fixed production rate. Little attention has been paid to finding the optimal production rate for minimizing the total system cost. This paper investigates how production rate affects the total system cost, and develops a solution procedure for finding the optimal production rate for the traditional models. Based on the findings, this paper proposes an integrated single-vendor single-buyer model of an exponentially deteriorating item, in which non-stop production is considered and production rate is included as one of the decision variables. It has been shown, with numerical examples, that the proposed model can provide a lower cost solution than the traditional models which assume a fixed production rate. The proposed model also considers deterioration during deliveries, which is usually neglected in the literature of inventory models of deteriorating items. Furthermore, the proposed model is extended to relax the constant cost parameter assumption, which is prevalent even in non-constant production rate models, and optimize the cost for a system in which some of the cost parameters are production rate dependent.

Wholesale Market, TETAŞ and Stranded Costs in the Turkish Power Market

The path that the liberalizing power markets have followed in many countries has common milestones that have been explored in the literature regarding power market liberalization pretty widely and thoroughly. One of the most important research topics and an important contribution to the literature on the subject is Making Competition Work in Electricity Markets by Sally Hunt. Although the path towards retail competition has been illustrated as models in this canonical research, four stages were depicted distinctly: vertically integrated model, single buyer model, wholesale competition and finally retail competition or retail choice.

INDUSTRIA ELÉCTRICA EN MÉXICO: TENSIÓN ENTRE EL ESTADO Y EL MERCADO

This paper analyzes State powers over the Mexican electricity industry. The 2013-2014 energy reform replaced the hybrid single buyer model –flawed as a result of excessive government intervention– with a wholesale electricity market that will gradually be extended to all users. To maximize competition, the State has retained ample and numerous powers to intervene through the Ministry of Energy. The transition from a public monopoly to an open market entails significant risks, which Mexico aims to minimize with strong political authority and a relatively controlled market.

Economic Analysis in Restructured Electricity Supply Industry (ESI) for Malaysian Market Model

Before 1980s, the generation, transmission and distribution vertically related sectors have typically been tied together within a utility. It has been either, investor owned and state-regulated or owned by the local municipality. Each sector was thought of as a natural monopoly. During that era, there were two main reasons accelerated for restructuring needs. The first one was to widen up the choices of electricity for customers. And the second one was due to rapid expansion capacity needs in generation, transmission and distribution. In Malaysia, the Malaysian Electricity Supply Industry (MESI) has aimed to restructure its current model to become a wholesale market model. In 1992, by introducing the Independent Power Producers (IPPs) in the loop, MESI applies Single Buyer model. Single Buyer model is one of the existing models available under the restructuring apart from Pool and Bilateral. This paper evaluates the economic benefits for Malaysia with the current structure from the side of electricity provider. A case study with load variation for three different maximum demands is considered in this paper. The mathematical equation developed by zero Loss of Load Probability is applied to evaluate the economic benefits.

Generation Revenue Assessment in Malaysia Electricity Supply Industry

Restructuring of electricity supply industry had begun in early 20th centuries. Malaysia Electricity Supply Industry (MESI) has aimed to change its structure to a wholesale market model in 2005. Started in 1992, Independent Power Producers (IPPs) were introduced and since then MESI had applied the Single Buyer Model until today. Even though, the Single Buyer Model had passed several process of evolution, it still a form of imperfect competition in which there is only one buyer and many sellers of a product. Therefore, other alternatives of electricity market model for MESI have been proposed, in order to carry on the MESI previous plan towards restructuring. This paper discusses three electricity market models; Single Buyer Market Model, Pool Market Model and Hybrid Market Model. The case study is carried out to compare the three market models in term of generation revenue. Data from 14 IPP and load profiles in MESI is used for the case study and the result will be discussed.

Assessing The Current Indonesia’s Electricity Market Arrangements and The Opportunities to Reform

Existing subsidy arrangements and institutional settings in the Indonesian electricity sector distort investment decisions and lead to higher cost. Electricity supply is characterized by natural monopoly characteristics, requiring different management by governments than sectors with more straightforward market characteristics. Many countries have undergone significant re-structuring of their electricity sectors, away from one, state owned and vertically integrated monopoly supplier to a setting whereby competition has emerged either at the generation level and/or the retail level. Transmission and distribution networks are typically heavily regulated and transparent access arrangements are put in place as part of the restructuring efforts. The analysis showed that the current structure of Indonesia’s electricity sector firmly within Model 2 (the single buyer model) and highlights that Indonesia is currently towards the less-competitive end of the spectrum of Model 2, identifying significant potential for efficiency enhancing reforms within this structure. Constitutional limitations have hampered previous efforts to restructure the sector in Indonesia but there is significant room for incremental reform to improve incentives in the sector and reduce the cost of generation in the process.