Virtual power players demand response programs management based on locational marginal prices

Power systems have been suffering huge changes mainly due to the substantial increase of distributed generation and to the operation in competitive environments. Virtual power players can aggregate a diversity of players, namely generators and consumers, and a diversity of energy resources, including electricity generation based on several technologies, storage and demand response. Resource management gains an increasing relevance in this competitive context, while demand side active role provides managers with increased demand elasticity. This makes demand response use more interesting and flexible, giving rise to a wide range of new opportunities.This paper proposes a methodology for managing demand response programs in the scope of virtual power players. The proposed method is based on the calculation of locational marginal prices (LMP). The evaluation of the impact of using demand response specific programs on the LMP value supports the manager decision concerning demand response use. The proposed method has been computationally implemented and its application is illustrated in this paper using a 32 bus network with intensive use of distributed generation.

Commercial agentes portfolio optimization in electricity markets

As it is well known, competitive electricity markets require new computing tools for power companies that operate in retail markets in order to enhance the management of its energy resources. During the last years there has been an increase of the renewable penetration into the micro-generation which begins to co-exist with the other existing power generation, giving rise to a new type of consumers. This paper develops a methodology to be applied to the management of the all the aggregators. The aggregator establishes bilateral contracts with its clients where the energy purchased and selling conditions are negotiated not only in terms of prices but also for other conditions that allow more flexibility in the way generation and consumption is addressed. The aggregator agent needs a tool to support the decision making in order to compose and select its customers' portfolio in an optimal way, for a given level of profitability and risk.

A green future for European electricity? :Energy sources, policies and further determinants of the household price of electricity

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

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.

The elasticity of demand is about occupancy, not prices: building European demand curves based on occupancy elasticity

The peak congestion of the European grid may create significant impacts on system costs because of the need for higher marginal cost generation, higher cost system balancing and increasing grid reinforcement investment. The use of time of use rates, incentives, real time pricing and other programmes, usually defined as Demand Side Management (DSM), could bring about significant reductions in prices, limit carbon emissions from dirty power plants, and improve the integration of renewable sources of energy. Unlike previous studies on elasticity of residential electricity demand under flat tariffs, the aim of this study is not to investigate the known relatively inelastic relationship between demand and prices. Rather, the aim is to assess how occupancy levels vary in different European countries. This reflects the reality of demand loads, which are predominantly determined by the timing of human activities (e.g. travelling to work, taking children to school) rather than prices. To this end, two types of occupancy elasticity are estimated: baseline occupancy elasticity and peak occupancy elasticity. These represent the intrinsic elasticity associated with human activities of single residential end-users in 15 European countries. This study makes use of occupancy time-series data from the Harmonised European Time Use Survey database to build European occupancy curves; identify peak occupancy periods; draw time use demand curves for video and TV watching activity; and estimate national occupancy elasticity levels of single-occupant households. Findings on occupancy elasticities provide an indication of possible DSM strategies based on occupancy levels and not prices.

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.

On the efficiency of the Argentinean electricity wholesale market

This paper discusses two key aspects regarding the efficiency of the Argentinean Electricity Market. Using hourly data on prices, marginal costs, and operational status of generators, it will be argued that, unlike the former British and Californian electricity spot markets, this market is not subject to the conventional forms of exercise of market power by generators. We then use Chao's (1983) model of optimal configuation of electricity supply to evaluate the social desirability of the change in the supply pattern of the Argentinean electricity industry, which took place throughout the last ten years.

Game Theoretic Bidding Strategies for Auctions in Green Electricity Markets

Electricity markets in the United States presently employ an auction mechanism to determine the dispatch of power generation units. In this market design, generators submit bid prices to a regulation agency for review, and the regulator conducts an auction selection in such a way that satisfies electricity demand. Most regulators currently use an auction selection method that minimizes total offer costs ["bid cost minimization" (BCM)] to determine electric dispatch. However, recent literature has shown that this method may not minimize consumer payments, and it has been shown that an alternative selection method that directly minimizes total consumer payments ["payment cost minimization" (PCM)] may benefit social welfare in the long term. The objective of this project is to further investigate the long term benefit of PCM implementation and determine whether it can provide lower costs to consumers. The two auction selection methods are expressed as linear constraint programs and are implemented in an optimization software package. Methodology for game theoretic bidding simulation is developed using EMCAS, a real-time market simulator. Results of a 30-day simulation showed that PCM reduced energy costs for consumers by 12%. However, this result will be cross-checked in the future with two other methods of bid simulation as proposed in this paper.

Simple-Offer vs. Complex-Offer Auctions in Deregulated Electricity Markets

In my recent experimental research of wholesale electricity auctions, I discovered that the complex structure of the offers leaves a lot of room for strategic behavior, which consequently leads to anti- competitive and inefficient outcomes in the market. A specific feature of these complex-offer auctions is that the sellers submit not only the quantities and the minimum prices at which they are willing to sell, but also the start-up fees that are designed to reimburse the fixed start-up costs of the generation plants. In this paper, using the experimental method I compare the performance of two complex-offer auctions (COAs) against the performance of a simple-offer auction (SOA), in which the sellers have to recover all their generation costs --- fixed and variable ---through a uniform market-clearing price. I find that the SOA significantly reduces consumer prices and lowers price volatility. It mitigates anti-competitive effects that are present in the COAs and achieves allocative efficiency more quickly.

The effect of electricity tariffs over the operating costs of the Spanish wastewater treatments plants

Given the complex structure of electricity tariffs and their steady growth in Spanish, we've studied its effect over the operating costs of the wastewater treatment plants (WWTP), concluding that in the last three years the revisions of electricity rates have meant increases in electricity costs of 64.5% in the rate 3.1.A and 79.1% in the rate 6.1. This has caused the cost of electricity, which was the most important, has increased from a 44% of total operating costs in the year 2009, to more than a 56% in the year 2012.

The steel industry in the European Union: Composition and drivers of energy prices and costs. CEPS Special Report No. 80, 17 December 2013

This report assesses the energy costs borne by the steel industry in the EU between 2010 and 2012, and compares the energy costs, including both the energy components and other regulatory costs, to production costs, turnover and margins of steel-makers. The estimates of energy costs are based on primary sources, i.e. is on information provided by steel-makers through a written questionnaire. This information was validated by the research team by checking annual energy bills, when available, and other public sources. In this respect, this exercise represents a unique fact-based investigation into the costs of energy for steel-makers in Europe, whereas most of the information currently available in the public domain is based on secondary or statistical information. In 2012, the median EU steel plant pays about €33/MWh for gas, up from €26/MWh in 2010. As for electricity, in 2012 the EU median plant pays €62/MWh, up from €59/MWh in 2010. The report also includes a comparison with the prices of energy carriers paid by producers based in the US.

Too high and too low: The problems with energy prices in the EU. OSW Commentary No. 122, 03.12.2013

On 11 October, the top executives of ten European energy companies, which jointly own about half of the European Union’s electricity generating capacity, warned that “energy security is no longer guaranteed” and once again called for changes to EU energy policy. Due to persistent adverse conditions in the energy market (linked to, for example, the exceptionally low wholesale energy prices) more and more conventional power plants are being closed down. According to sector representatives, this could lead to energy shortages being seen as early as this winter. Meanwhile, in an interview with The Daily Telegraph published in September of this year, the European industry commissioner Antonio Tajani warned – in a rather alarmist tone – of the disastrous consequences the rising energy prices could have on European industry. Amongst the reasons for the high prices of energy, Tajani mentioned the overambitious pace and methods used to increase the share of renewables in the sector. In a similar vein, EU President Herman Van Rompuy has highlighted the need to reduce energy costs as a top priority for EU energy policy1. The price of energy has become one of the central issues in the current EU energy debate. The high consumer price of energy – which has been rising steadily over the past several years – poses a serious challenge to both household and industrial users. Meanwhile, the declining wholesale prices are affecting the cost-effectiveness of energy production and the profits of energy companies. The current difficulties, however, are first and foremost a symptom of much wider problems related to the functioning of both the EU energy market as well as to the EU’s climate and energy policies.

An analysis of cost factors of 1974 coal prices /

"June 15, 1975."

Composite auction method for suppressing unreasonable electricity price spikes in a competitive electricity market

The existence of undesirable electricity price spikes in a competitive electricity market requires an efficient auction mechanism. However, many of the existing auction mechanism have difficulties in suppressing such unreasonable price spikes effectively. A new auction mechanism is proposed to suppress effectively unreasonable price spikes in a competitive electricity market. It optimally combines system marginal price auction and pay as bid auction mechanisms. A threshold value is determined to activate the switching between the marginal price auction and the proposed composite auction. Basically when the system marginal price is higher than the threshold value, the composite auction for high price electricity market is activated. The winning electricity sellers will sell their electricity at the system marginal price or their own bid prices, depending on their rights of being paid at the system marginal price and their offers' impact on suppressing undesirable price spikes. Such economic stimuli discourage sellers from practising economic and physical withholdings. Multiple price caps are proposed to regulate strong market power. We also compare other auction mechanisms to highlight the characteristics of the proposed one. Numerical simulation using the proposed auction mechanism is given to illustrate the procedure of this new auction mechanism.

Power flow based monetary flow method for electricity transmission and wheeling pricing

This paper proposes a transmission and wheeling pricing method based on the monetary flow tracing along power flow paths: the monetary flow-monetary path method. Active and reactive power flows are converted into monetary flows by using nodal prices. The method introduces a uniform measurement for transmission service usages by active and reactive powers. Because monetary flows are related to the nodal prices, the impacts of generators and loads on operation constraints and the interactive impacts between active and reactive powers can be considered. Total transmission service cost is separated into more practical line-related costs and system-wide cost, and can be flexibly distributed between generators and loads. The method is able to reconcile transmission service cost fairly and to optimize transmission system operation and development. The case study on the IEEE 30 bus test system shows that the proposed pricing method is effective in creating economic signals towards the efficient use and operation of the transmission system. (c) 2005 Elsevier B.V. All rights reserved.