Post-neoliberal electricity market ‘re-reforms’ in Argentina: Diverging from market prescriptions?

This paper focuses upon the policy and institutional change that has taken place within the Argentine electricity market since the country’s economic and social crisis of 2001/2. As one of the first less developed countries (LDCs) to liberalise and privatise its electricity industry, Argentina has since moved away from the orthodox market model after consumer prices were frozen by the Government in early 2002 when the national currency was devalued by 70%. Although its reforms were widely praised during the 1990s, the electricity market has undergone a number of interventions, ostensibly to keep consumer prices low and to avert the much-discussed energy ‘crisis’ caused by a dearth of new investment combined with rising demand levels. This paper explores how the economic crisis and its consequences have both enabled and legitimised these policy and institutional amendments, while drawing upon the specifics of the post-neoliberal market ‘re-reforms’ to consider the extent to which the Government appears to be moving away from market-based prescriptions. In addition, this paper contributes to sector-specific understandings of how, despite these changes, neoliberal ideas and assumptions continue to dominate Argentine public policy well beyond the postcrisis era.

Controlling market power of vertically integrated firms in electricity networks: demand response of aggregator agents

This article reports the results of an experiment that examined how demand aggregators can discipline vertically-integrated firms - generator and distributor-retailer holdings-, which have a high share in wholesale electricity market with uniform price double auction (UPDA). We initially develop a treatment where holding members redistribute the profit based on the imposition of supra-competitive prices, in equal proportions (50%-50%). Subsequently, we introduce a vertical disintegration (unbundling) treatment with holding-s information sharing, where profits are distributed according to market outcomes. Finally, a third treatment is performed to introduce two active demand aggregators, with flexible interruptible loads in real time. We found that the introduction of responsive demand aggregators neutralizes the power market and increases market efficiency, even beyond what is achieved through vertical disintegration.

‘Nudging’ energy users: regulatory measures to address the risk of aggregate peak demand in European electricity markets

For decades regulators in the energy sector have focused on facilitating the maximisation of energy supply in order to meet demand through liberalisation and removal of market barriers. The debate on climate change has emphasised a new type of risk in the balance between energy demand and supply: excessively high energy demand brings about significantly negative environmental and economic impacts. This is because if a vast number of users is consuming electricity at the same time, energy suppliers have to activate dirty old power plants with higher greenhouse gas emissions and higher system costs. The creation of a Europe-wide electricity market requires a systematic investigation into the risk of aggregate peak demand. This paper draws on the e-Living Time-Use Survey database to assess the risk of aggregate peak residential electricity demand for European energy markets. Findings highlight in which countries and for what activities the risk of aggregate peak demand is greater. The discussion highlights which approaches energy regulators have started considering to convince users about the risks of consuming too much energy during peak times. These include ‘nudging’ approaches such as the roll-out of smart meters, incentives for shifting the timing of energy consumption, differentiated time-of-use tariffs, regulatory financial incentives and consumption data sharing at the community level.

CASCADE: An Agent Based Framework For Modeling The Dynamics Of Smart Electricity Systems

The Complex Adaptive Systems, Cognitive Agents and Distributed Energy (CASCADE) project is developing a framework based on Agent Based Modelling (ABM). The CASCADE Framework can be used both to gain policy and industry relevant insights into the smart grid concept itself and as a platform to design and test distributed ICT solutions for smart grid based business entities. ABM is used to capture the behaviors of diff erent social, economic and technical actors, which may be defi ned at various levels of abstraction. It is applied to understanding their interactions and can be adapted to include learning processes and emergent patterns. CASCADE models ‘prosumer’ agents (i.e., producers and/or consumers of energy) and ‘aggregator’ agents (e.g., traders of energy in both wholesale and retail markets) at various scales, from large generators and Energy Service Companies down to individual people and devices. The CASCADE Framework is formed of three main subdivisions that link models of electricity supply and demand, the electricity market and power fl ow. It can also model the variability of renewable energy generation caused by the weather, which is an important issue for grid balancing and the profi tability of energy suppliers. The development of CASCADE has already yielded some interesting early fi ndings, demonstrating that it is possible for a mediating agent (aggregator) to achieve stable demandfl attening across groups of domestic households fi tted with smart energy control and communication devices, where direct wholesale price signals had previously been found to produce characteristic complex system instability. In another example, it has demonstrated how large changes in supply mix can be caused even by small changes in demand profi le. Ongoing and planned refi nements to the Framework will support investigation of demand response at various scales, the integration of the power sector with transport and heat sectors, novel technology adoption and diffusion work, evolution of new smart grid business models, and complex power grid engineering and market interactions.

Privatisation and cross-border electricity trade: from internal market to European Supergrid?

he perspective European Supergrid would consist of an integrated power system network, where electricity demands from one country could be met by generation from another country. This paper makes use of a bi-linear fixed-effects model to analyse the determinants for trading electricity across borders among 34 countries connected by the European Supergrid. The key question that this paper aims to address is the extent to which the privatisation of European electricity markets has brought about higher cross-border trade of electricity. The analysis makes use of distance, price ratios, gate closure times, size of peaks and aggregate demand as standard determinants. Controlling for other standard determinants, it is concluded that privatisation in most cases led to higher power exchange and that the benefits are more significant where privatisation measures have been in place for a longer period.

A comparative value of electricity storage within GB market mechanisms

This paper investigates the value of a generic storage system within two GB market mechanisms and one ancillary service provision: the wholesale power market, the Balancing Mechanism and Firm Frequency Response (FFR). Three models are evaluated under perfect foresight and fixed horizon which is subsequently extended to explore the impact of a longer foresight on market revenues. The results show that comparatively, the balancing mechanism represents the highest source of potential revenues followed by the wholesale power market and Firm Frequency Response respectively. Longer horizons show diminishing returns, with the 1 day horizon providing the vast majority of total revenues. However storage power capacity utilization benefits from such long horizons. These results could imply that short horizons are very effective in capturing revenues in both the wholesale market and balancing mechanism whereas sizing of a storage system should take into consideration horizon foresight and accuracy for greater benefit.

Investigating preferences for dynamic electricity tariffs: the effect of environmental and system benefit disclosure

Dynamic electricity pricing can produce efficiency gains in the electricity sector and help achieve energy policy goals such as increasing electric system reliability and supporting renewable energy deployment. Retail electric companies can offer dynamic pricing to residential electricity customers via smart meter-enabled tariffs that proxy the cost to procure electricity on the wholesale market. Current investments in the smart metering necessary to implement dynamic tariffs show policy makers’ resolve for enabling responsive demand and realizing its benefits. However, despite these benefits and the potential bill savings these tariffs can offer, adoption among residential customers remains at low levels. Using a choice experiment approach, this paper seeks to determine whether disclosing the environmental and system benefits of dynamic tariffs to residential customers can increase adoption. Although sampling and design issues preclude wide generalization, we found that our environmentally conscious respondents reduced their required discount to switch to dynamic tariffs around 10% in response to higher awareness of environmental and system benefits. The perception that shifting usage is easy to do also had a significant impact, indicating the potential importance of enabling technology. Perhaps the targeted communication strategy employed by this study is one way to increase adoption and achieve policy goals.