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Modelling the impact of market interventions on the strategic evolution of electricity markets

Journal

Operations Research

Subject

Management Science and Operations

Publishing details

Operations Research 2008 Vol 56:5 p 1116-1130

Authors / Editors

Bunn D W;Oliveira F

Biographies

Derek Bunn

Publication Year

2008

Abstract

This paper presents a large-scale computationally intensive model for understanding the dynamic strategic evolution of electricity-generating asset portfolios in response to various market interventions, and the consequent longer-term effects of such changes on market structure and prices. We formulate a multistage model involving a Cournot representation of the wholesale electricity market, the performance of which then determines plant trading between players and the coevolution of market structure. An algorithm to model this game is presented. We apply this model to the full England and Wales system, as it was in 2000, and simulate the strategic responses to divestiture, capacity targets, and the two market mechanism variants of pool and bilateral market clearing.

Keywords

Games/group decisions; Noncooperative; Government; Energy policies; Regulations; Industries; Electricity

Available on ECCH

No


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