the electricity generation adequacy problem assessing dynamic effects of capacity remuneration mechanisms abstract following liberalization reforms the ability of power markets to provide satisfactory incentives for capacity investments has become a major concern in particular current energy markets can exhibit a phenomenon of investment cycles which generate phases of under and over capacity and hence additional costs and risks for generation adequacy to cope with these issues new mechanisms called capacity remuneration mechanisms crm have been or will be implemented this paper assesses the dynamic effects of two crms the capacity market and the strategic reserve mechanism and studies to what extent they can reduce the investment cycles generation costs and shortage costs of both mechanisms are also compared to conclude on their effectivity and economic efficiency a simulation model based on system dynamics is developed to study the functioning of both crms and the related investment decisions the results highlight the benefits of deploying crms to solve the adequacy issue shortages are strongly reduced compared to an energy only market besides the capacity market appears to be more beneficial since it experiences fewer shortages and generation costs are lower these comparisons can be used by policy makers in particular in europe where these two crms are mainly debated to determine which crm to adopt

a price based approach to generation investment planning in electricity markets a generation planning framework is developed for a competitive energy only electricity market the framework developed combines decentralized merchant investment plans stemming from market signals and technological preferences with centralized resource planning concepts to decide optimal time ordered investment decisions the investment decisions maximize the new entrants net surpluses and minimize the consumer interruption cost accounting for many uncertain variables and technical details the optimal plan given by the main centralized framework represents the system planner s solution derived from the set of decentralized plans an illustrative case study is given in the paper applying the proposed framework to the queensland region of the national electricity market of australia

real option valuation of power transmission investments by stochastic simulation abstract network expansions in power markets usually lead to investment decisions subject to substantial irreversibility and uncertainty hence investors need valuing the flexibility to change decisions as uncertainty unfolds progressively real option analysis is an advanced valuation technique that enables planners to take advantage of market opportunities while preventing or mitigating losses if future conditions evolve unfavorably in the past many approaches for valuing real options have been developed however applying these methods to value transmission projects is often inappropriate as revenue cash flows are path dependent and affected by a myriad of uncertain variables in this work a valuation technique based on stochastic simulation and recursive dynamic programming called least square monte carlo is applied to properly value the deferral option in a transmission investment the effect of option s maturity the initial outlay and the capital cost upon the value of the postponement option is investigated finally sensitivity analysis determines optimal decision regions to execute postpone or reject the investment projects

optimal investments in power generation under centralized and decentralized decision making this work presents a novel model for optimization of investments in new power generation under uncertainty the model can calculate optimal investment strategies under both centralized social welfare and decentralized profit objectives the power market is represented with linear supply and demand curves a stochastic dynamic programming algorithm is used to solve the investment problem where uncertainty in demand is represented as a discrete markov chain the stochastic dynamic model allows us to evaluate investment projects in new base and peak load power generation as real options and determine optimal timing of the investments in a case study we use the model to compare optimal investment strategies under centralized and decentralized decision making a number of interesting results follow by varying the assumptions about market structure and price response on the demand side

pro poor targeting and accountability of local governments in west bengal a commonly alleged pitfall of decentralization is that poverty socio economic inequality and lack of political competition allow local elites to capture local governments this hypothesis is empirically examined using a longitudinal sample of 89 west bengal villages concerning targeting of credit agricultural input kits employment programs and fiscal grants spanning the period 1978 98 higher poverty land inequality and low caste composition of the poor was associated with negligible adverse effects on targeting of private goods to the poor within villages but with lower employment generation out of allotted funds and significantly lower allocation of resources to the village as a whole political competition or literacy levels among the poor were not systematically related to targeting

country specific oil supply shocks and the global economy a counterfactual analysis abstract this paper investigates the global macroeconomic consequences of country specific oil supply shocks our contribution is both theoretical and empirical on the theoretical side we develop a model for the global oil market and integrate this within a compact quarterly model of the global economy to illustrate how our multi country approach to modeling oil markets can be used to identify country specific oil supply shocks on the empirical side estimating the gvar oil model for 27 countries regions over the period 1979q2 to 2013q1 we show that the global economic implications of oil supply shocks due to for instance sanctions wars or natural disasters vary considerably depending on which country is subject to the shock in particular we find that adverse shocks to iranian oil output are neutralized in terms of their effects on the global economy real outputs and financial markets mainly due to an increase in saudi arabian oil production in contrast a negative shock to oil supply in saudi arabia leads to an immediate and permanent increase in oil prices given that the loss in saudi arabian production is not compensated for by the other oil producers as a result a saudi arabian oil supply shock has significant adverse effects for the global economy with real gdp falling in both advanced and emerging economies and large losses in real equity prices worldwide

determinants of redistributive politics an empirical analysis of land reforms in west bengal india we investigate political determinants of land reform implementation in the indian state of west bengal using a village panel spanning 1974 1998 we do not find evidence supporting the hypothesis that land reforms were positively and monotonically related to control of local governments by a left front coalition vis vis the right centrist congress party combined with lack of commitment to policy platforms instead the evidence is consistent with a quasi downsian theory stressing the role of opportunism reelection concerns and electoral competition jel d72 013 017 q15

optimizing the level of renewable electric r d expenditures using real options analysis abstract one of the primary objectives of the united states federal non hydro renewable electric r d program is to promote the development of technologies that have the potential to provide consumers with stable and secure energy supplies in order to quantify the benefits provided by continued federal renewable electric r d this paper uses real option pricing techniques to estimate the value of renewable electric technologies in the face of uncertain fossil fuel prices within the real options analysis framework the current value of expected future supply from renewable electric technologies net of federal r d expenditures is estimated to be 30 6 billion of this value 86 can be attributed to past federal r d efforts and 14 can be attributed to future federal r d efforts assuming continued federal r d funding at 300 million yr in addition real options analysis shows that the value of renewable electric technologies increases as current and future r d funding levels increase this indicates that the current level of federal renewable electric r d funding is sub optimal

an optimization approach for managing fresh food quality throughout the supply chain one of the most challenging tasks in today s food industry is controlling the product quality throughout the food supply chain in this paper we integrate food quality in decision making on production and distribution in a food supply chain we provide a methodology to model food quality degradation in such a way that it can be integrated in a mixed integer linear programming model used for production and distribution planning the resulting model is applied in an illustrative case study and can be used to design and operate food distribution systems using both food quality and cost criteria

auction approaches of long term contracts to ensure generation investment in electricity markets lessons from the brazilian and chilean experiences the implementation of auctions of long term electricity contracts is arising as an alternative to ensure generation investment and therefore achieve a reliable electricity supply the aim is to reconcile generation adequacy with efficient energy purchase correct risk allocation among investors and consumers and the politico economic environment of the country in this paper a generic proposal for a long term electricity contracts approach is made including practical design concepts for implementation this proposal is empirically derived from the auctions implemented in brazil and chile during the last 6 years the study is focused on practices and lessons which are especially useful for regulators and policy makers that want to facilitate the financing of new desirable power plants in risky environments and also efficiently allocate supply contracts among investors at competitive prices although this mechanism is generally seen as a significant improvement in market regulation there are questions and concerns on auction performance that require careful design and which are identified in this paper in addition the experiences and proposal described can serve to derive further mechanisms in order to promote the entrance of particular generation technologies e g renewables in the developed world and therefore achieve a clean electricity supply

a dynamic analysis of a demand curve based capacity market proposal the pjm reliability pricing model because of high generation adequacy standards in the power industry some peaking capacity operates for a limited time during the year and may not receive sufficient energy revenues to meet its fixed costs this is particularly true when energy prices are capped in order to mitigate market power the northeastern u s independent system operators isos have responded to this issue by establishing capacity obligations for loads and markets for installed capacity thus providing a capacity revenue stream to generators the installed capacity icap markets in the northeastern u s markets are a response to this need for additional incentives to construct generation the federal energy regulatory commission ferc has accepted the pjm interconnection s pjm proposal to replace the present fixed icap requirement that is placed upon load serving entities lses with a demand curve based system in which the iso would be responsible for acquiring residual capacity on behalf of lses the demand curve approach pays more when reserve margins are smaller and provides a reduced incentive for investment when installed reserves are above the target another goal is to make revenues more predictable for generators making investment less costly and ultimately lowering prices for consumers a dynamic representative agent model is presented for projecting effects upon reserve margins generator profitability and consumer costs and is applied to alternative demand curves proposed for the pjm market the consumer costs resulting from a sloped demand curve are robustly lower compared to the present fixed requirement under a wide range of assumptions concerning behavior of generation owners including risk attitudes bidding behavior and willingness to build capacity as a function of forecast profit the cost savings arise from lower capital costs to generators due to reduced risk and risk premiums also average installed capacity is less for the same level of reliability because of reduced fluctuations in installed reserves

assessing the impacts of capacity mechanisms on generation adequacy with dynamic simulations there have been many debates over whether the energy only electricity market will be able to provide a reasonable investment signal so far many diverse designs of capacity mechanisms have been proposed in relation to the adequacy problem researchers have conducted many qualitative studies of capacity mechanisms but quantitative studies have largely been ignored the framework for examining the impacts of market designs on generation adequacy considering various generation technologies have not been maturely developed this paper focuses on developing this framework and finding out how effective capacity mechanisms are in different market conditions to cover investment under uncertainty we will introduce different utility functions representing risk attitudes and apply the expected utility theory to the investment decision finally we will examine the investment decision sensitivity of the risk components such as the risk attitude the error of forecast peak load and the forced outage rate and evaluate the performance of three market designs with dynamic simulations an energy only market a capacity payment model and a capacity demand curve model

state led or market led green revolution role of private irrigation investment vis a vis local government programs in west bengal s farm productivity growth this paper estimates respective roles of private investments in irrigation and local government programs land reforms extension services and infrastructure investments in the growth of farm productivity in west bengal india between 1981 95 using a farm panel from a stratified random sample of farms from major agricultural districts of west bengal we find evidence that private investment in irrigation which reduced irrigation costs for farms played an important role in the growth process however the growth in private investment was itself stimulated by tenancy registration and minikit distribution programs implemented by local governments this channel helps account for the substantial spillover effects of the tenancy reform on non tenant farms noted in an earlier study hence the observed productivity growth was a result of complementarity between private investment incentives and state led institutional reforms

investment with incomplete markets for risk the need for long term contracts abstract barring subsidies investment in the power generation sector has come to an almost complete halt in the restructured european power sector market and regulatory failures such as the well known missing money see joskow 2006 but also normal market features such as risk possibly also affected by market failures like market incompleteness are mentioned as common causes for the situation this paper discusses incomplete risk trading and its impact on investment the analysis applies computable stochastic equilibrium models on a simple market model of the energy only type the paper first compares the cases of complete and fully incomplete markets full risk trading and no risk trading it continues by testing the impact of different risk trading contracts on both welfare and investment we successively consider contracts for difference reliability options with and without physical back up that we add to our energy only market model we test the impact of market liquidity on the results finally we compare these methods to a forward capacity market that we also add to the energy only model we complete the paper by interpretation of these results in terms of hurdle rate implied by these risk trading situations

evaluation of regulatory impacts on dynamic behavior of investments in electricity markets a new hybrid dp game framework a new hybrid framework based on game theory and dynamic programming dp with random demands and prices is proposed for studying the impacts of regulatory interventions on the dynamics of investment in power generation in electricity markets in our approach using markov chains the electric demand and growth of fuel prices have been modeled dp has been used for solving the generation expansion planning gep problem investment strategies of other investors in the market are modeled as constraints the income of the investor is calculated by modeling strategic interactions among market players in the spot energy market the cournot game concept has been applied and the nash equilibrium is calculated for each state and stage of dp simulation results confirm that the proposed framework is an appropriate decision support tool that provides useful information about dynamics of investment

inequality control rights and rent seeking sugar cooperatives in maharashtra this paper presents a theory of rent seeking within farmer cooperatives in which inequality of asset ownership affects relative control rights of different groups of members the two key assumptions are constraints on lump sum transfers from poorer members and disproportionate control rights wielded by wealthier members transfers of rents to the latter are achieved by depressing prices paid for inputs supplied by members and diverting resulting retained earnings the theory predicts that increased heterogeneity of landholdings in the local area causes increased inefficiency by inducing a lower input price and a lower level of installed crushing capacity predictions concerning the effect of the distribution of local landownership on sugarcane price capacity levels and participation rates of different classes of farmers are confirmed by data from nearly 100 sugar cooperatives in the indian state of maharashtra over the period 1971 93

improving the impact of quantitative analysis on supply chain policy making abstract the phenomenon of formulating and bringing in a set of a new way to operate a policy into the supply chain environment is examined the general change management research findings are applied to the supply chain environment to identify the phases of policy making the different roles of quantitative analysis in the process are identified using a multiple case study of eight policy making processes the study points out that the impact of quantitative analysis on supply chain policy making can be improved by adapting the different roles of the analysis in the different stages of the policy making process

the carbon market incremental payoff in renewable electricity generation projects in brazil a real options approach the objective of this work is to present a methodology capable of estimating the incremental payoff of the carbon market for grid connected renewable power generation projects in brazil the proposed methodology consists of using the newave model to determine the optimal operating policy for the brazilian interconnected system over the medium term and to establish hydrological dispatch scenarios for the power plants connected to this system based on these results the criteria defined in the methodology acm0002 were used to estimate the baseline of the projects developed in response to the clean development mechanism of the kyoto protocol having estimated the baseline for the project the incremental payoff obtained from the sale of certified emission reductions is estimated using the real options theory subsequently the value of the option is added to the conventional cash flow of the project determining the impact of the carbon market on its internal rate of return

integrating real options analysis with long term electricity market models abstract in liberalized electricity markets the investment postponement option is deemed decisive for understanding the addition of new generating capacity basically it refers to the possibility for investors to postpone projects for a period while waiting for the arrival of new and better information about the market evolution when such development involves major uncertainties the generation business becomes riskier and the investors wait and see behavior might limit the timely addition of new power plants in that sense the literature provides solid empirical evidence about the occurrence of construction cycles in the deregulated electricity industry however the strategic flexibility inherent to the option to defer new power plants has not yet been rigorously incorporated to investment signals in existing market models therefore this paper proposes a novel methodology to assess the long term development of liberalized power markets based on a more realistic approach for valuing generation investments the work is based on a stochastic dynamic market model built upon system dynamics simulation approach the decision making framework considers that the addition of new capacity is driven by the economic value of the strategic flexibility associated with deferring investments under uncertainties thus the value of the postponement option is quantified in monetary terms through real options analysis simulations confirm the cyclical behavior of the energy only market in the long run as suggested by the empirical evidence found in the literature in addition sensitivity analysis regarding some relevant exogenous variables depicts an even more fluctuating evolution of the capacity due to the combination of strong demand growth rates with large volatilities finally the model validity is assessed through a formal procedure according to the scope of system dynamics modeling approach

generation capacity expansion in energy markets using a two level game theoretic model with a significant number of states in the u s and countries around the world trading electricity in restructured markets a sizeable proportion of capacity expansion in the future will have to take place in market based environments however since a majority of the literature on capacity expansion is focused on regulated market structures there is a critical need for comprehensive capacity expansion models targeting restructured markets in this research we develop a two tier matrix game model and a novel solution algorithm that incorporates risk due to volatilities in profit via cvar intended for use by generators to make multi period multi player generation capacity expansion decisions we demonstrate the applicability of the model using a sample network from power world software and analyze the results

electricity auctions in south america towards convergence of system adequacy and res e support regulatory reforms of the electricity industry in south america have always been prompted by the need of attracting enough investment to cover the fast paced demand growth in order to achieve this goal the countries in the region which in the eighties and early nineties opted for market oriented schemes have rebuilt in the last decade their regulatory frameworks around long term auctioning these new mechanisms initially implemented to attract investment in any sort of conventional generation technology so as to ensure the system adequacy are increasingly being also used to bring in non conventional renewable energy resources these schemes have been until now run in parallel but the steep learning curve of renewable energy sources for electricity res e technologies is apparently opening the door to the implementation of new tendering procedures open to all kinds of generation technologies in this article we review the auction mechanisms for new generation implemented in south america we argue that although the first impression might lead to the conclusion that conventional and res e technologies are in some cases close and even ostensibly competing in the same auctions the fact is that the full convergence is still far to happen as the rules and products applied to the different technologies differ significantly

rationales for capacity remuneration mechanisms security of supply externalities and asymmetric investment incentives economics so far provides little conceptual guidance on capacity remuneration mechanisms crm in deregulated electricity markets ubiquitous in real world electricity markets crms are introduced country by country in an ad hoc manner lacking the theoretical legitimacy and the conceptual coherence enabling comparability and coordination they are eyed with suspicion by a profession wedded to a theoretical benchmark model that argues that competitive energy only markets with voll pricing provide adequate levels of capacity while the benchmark model is a consistent starting point for discussions about electricity market design it ignores the two market failures that make crms the practically appropriate and theoretically justified policy response to capacity issues first energy only markets fail to internalize security of supply externalities as involuntary curbs on demand under scarcity pricing generate social costs beyond the private non consumption of electricity second when demand is inelastic and the potential capacity additions are discretely sized investors face asymmetric incentives and will underinvest at the margin rather than overinvest after presenting the key features of the theoretical benchmark model this paper conceptualizes security of supply externalities and asymmetric investment incentives and concludes with some consideration regarding design of crms

a decision support framework for exploring supply chain tradeoffs abstract producers of retail products continually need to determine how much of a particular product to produce the difficulty of judging correctly is compounded when the product has a short production sales interval and is made primarily for sale during the big winter shopping season e g around christmas holiday in an effort to minimize production and distribution costs decision makers would like to produce as early as possible but doing so would increase the risk of producing the wrong quantity good forecasting mitigates this problem and the use of agile supply chains allows the firm to produce later in the production sales interval both however add to the cost of production if the external environment is volatile then there would be increased uncertainty as to a desirable course of action this paper presents a simulation based decision support framework for exploring the tradeoffs in producing different quantities under a variety of supply chain configurations and alternate forecasting options given uncertain demand environments we provide an illustrative example to highlight these tradeoffs

electric power system planning under time of use rates investment decisions under time of use rates and their relationship to utility system planning are examined optimal investment and price under social welfare maximization are derived and compared with the results of static analyses for a multiplant case the optimal pricing and investment policy are characterized by a plant of lower cost in a wide range of cost parameters it is found that the second best price the so called ramsey price is higher than the best price by an amount proportional to the ratio of deficit to revenue of an electric utility

two stage robust generation expansion planning a mixed integer linear programming model this paper presents a new uncertainty handling framework for optimal generation expansion planning gep amalgamating the notions of single stage and two stage robust optimization ro the proposed multiyear robust gep methodology as a tractable mixed integer linear programming optimization problem copes with the inherent planning uncertainties associated with forecasted electricity load demand as well as estimated investment and operation costs through distribution free bounded intervals producing polyhedral uncertainty sets the optimal generation expansion plan obtained from the proposed ro approach is immunized against worst case planning uncertainties considering the adopted degree of conservatism for each uncertainty set therefore the proposed methodology is capable of controlling the robustness of the optimal investment schedule regarding the enforced planning uncertainties simulation results demonstrate the efficacy and efficiency of the proposed ro framework throughout gep studies

investment timing and optimal capacity choice for small hydropower projects this paper presents a method for assessing small hydropower projects that are subject to uncertain electricity prices we present a real options based method with continuous scaling and we find that there is a unique price limit for initiating the project if the current electricity price is below this limit it is never optimal to invest but above this limit investment is made according to the function for optimal size the connection between the real option and the physical properties of a small hydropower plant is dealt with using a spreadsheet model that performs a technical simulation of the production in a plant based on all the important choices for such a plant the main results of the spreadsheet are simulated production size and the investment costs which are in turn used for finding the value of the real option and the price limit the method is illustrated on three different norwegian small hydropower projects

enhanced operational reserve as a tool for development of optimal energy mix abstract the aim of this article is to present a novel capacity remuneration mechanism concept that differentiates the level of financial support according to the technology and parameters of the new power plants new power plants that are to be constructed should guarantee the highest level of security of electricity supply and be consistent with actual energy policy carried out by a country thus the proposed remuneration system is based on an operational reserve system which is currently implemented in poland the proposed system distinguishes new power generating assets according to a total assessment based on three factors type of technology including emission benchmark flexibility and location addressing issue of brown or green field investment and conditions of power system operation existing power plants are also subsidized by the proposed mechanism however their remuneration is not based on their characteristics the details of the proposed mechanism a cost analysis and a standardized evaluation procedure are described in the paper the concept itself is universal and can be intruded in every power system that must overcome capacity problem

learning by doing and learning from others human capital and technical change in agriculture household level panel data from a nationally representative sample of rural indian households describing the adoption and profitability of high yielding seed varieties hyvs associated with the green revolution are used to test the implications of a model incorporating learning by doing and learning spillovers the estimates indicate that i imperfect knowledge about the management of the new seeds was a significant barrier to adoption ii this barrier diminished as farmer experience with the new technologies increased iii own experience and neighbors experience with hyvs significantly increased hyv profitability and iv farmers do not fully incorporate the village returns to learning in making adoption decisions

game theory approach to use of noncommercial power plants under time of use pricing the authors use the game theory approach for evaluating the impact of the introduction of customer owned noncommercial power plants ncp when time of use pricing is used various results from this analysis are derived some of which are that the conflict between ncp customer and the supplier forces the supplier to reduce the price of ncp customers perception of the situation in which they are involved in plays an important role in this conflict the game model analysis presented provides a detailed quantitative information on electricity prices and on the ways of using ncp

strategic generation investment under uncertainty via benders decomposition we address the generation investment problem faced by a strategic power producer and consider a detailed description of the uncertain parameters involved namely rival producer investment and market offering and demand growth to identify optimal investment decisions we consider a target year and propose a bilevel model whose upper level problem determines investment and offering decisions to maximize expected profit and whose many lower level problems represent market clearing conditions per demand block and scenario since the producer total expected profit is sufficiently convex with respect to investment decisions a benders decomposition approach is proposed that results in a tractable formulation even if hundred of scenarios are used to describe uncertain parameters extensive numerical simulations based on realistic case studies show the good performance of the proposed decomposition approach

short term resource adequacy in electricity market design short term resource adequacy is the ability of a system with a set of given resources to meet the load over the short term in the aftermath of the 2000 2001 california crisis the consideration of resource adequacy in market design became critically important various capacity approaches such as requirements payments and subscriptions have been proposed to ensure resource adequacy in electricity markets we focus on short term resource adequacy design and analysis within the context of making effective use of competition in electricity markets we propose a design of a short term resource adequacy program based on capacity requirements expressed in terms of a price sensitive demand curve the program gives incentives for providing capacity to markets and metes out penalties for nonperformance situations the probabilistic modeling of the uncertainty in the generation availability and in the load allows the evaluation of reliability in terms of widely used metrics the analysis of the proposed design and the simulation of a simple implementation on different sized test systems show that the program results in improved reliability these studies indicate that the total system costs may be minimized when key program parameters are appropriately chosen the proposed design provides a meaningful linkage between reliability and markets and constitutes a contribution to the electricity market design

characteristics of the prices of operating reserves and regulation services in competitive electricity markets in this paper characteristics of the prices of reserves and regulation services in the ontario new york and ercot electricity markets are studied more specifically price variability price jumps long range correlation and non linearity of the prices are analyzed using the available measures in the literature for the ontario electricity market the prices of 10 min spinning 10 min non spinning and 30 min operating reserves for the period may 1 2002 to december 31 2007 are analyzed for the new york market prices of the same reserves plus regulation service are studied for the period february 5 2005 to december 31 2008 for the ercot market we analyze the prices of responsive reserve regulation up and regulation down services for the period january 1 2005 to december 31 2009 the studied characteristics of operating reserve and regulation prices are also compared with those of energy prices the findings of this paper show that the studied reserve and regulation prices feature extreme volatility more frequent jumps and spikes different peak price occurrence time and lower predictability compared to the energy prices

dynamic scheduling of operating reserves in co optimized electricity markets with wind power we propose a probabilistic methodology to estimate a demand curve for operating reserves where the curve represents the amount that a system operator is willing to pay for these services the demand curve is quantified by the cost of unserved energy and the expected loss of load accounting for uncertainty from generator contingencies load forecasting errors and wind power forecasting errors the methodology addresses two key challenges in electricity market design integrating wind power more efficiently and improving scarcity pricing in a case study we apply the proposed operating reserve strategies in a two settlement electricity market with centralized unit commitment and economic dispatch and co optimization of energy and reserves we compare the proposed probabilistic approach to traditional operating reserve rules we use the illinois power system to illustrate the efficiency of the proposed reserve market modeling approach when it is combined with probabilistic wind power forecasting

testing between competing models of sharecropping the marshallian approach assumes a prohibitively high cost of monitoring the sharecropper s activities while the monitoring approach argues that landlords stipulate and effectively monitor sharecroppers activities i present new evidence using detailed data collected from eight indian villages most tenants own some land of their own this provides a controlled environment in studying the impact of contractual arrangements the differences in input and output intensities on owned minus sharecropped land of the same household are found to be sizable and significant suggesting a rejection of the monitoring approach and supporting the notion of the marshallian productive inefficiency of sharecropping

pricing reliability options under different electricity price regimes abstract reliability options are capacity remuneration mechanisms aimed at enhancing security of supply in electricity systems they can be framed as call options on electricity sold by power producers to system operators this paper provides a comprehensive mathematical treatment of reliability options their value is first derived by means of closed form pricing formulae which are obtained under several assumptions about the dynamics of electricity prices and strike prices then the value of the reliability option is simulated under a real market calibration using data of the italian power market we perform sensitivity analyses to highlight the role of the level and volatility of both power and strike price of the mean reversion speeds and of the correlation coefficient on the reliability options value finally we calculate the parameter model risk to quantify the impact that a model misspecification has on the equilibrium value of the ro

tales of two islands lessons for eu energy policy from electricity market reforms in britain and ireland abstract britain considers the energy only eu target electricity model tem wanting in delivering the trilemma of reliability sustainability and affordability and argues that a capacity auction with long term contracts for new entrants is the least cost solution compared to relying on expectations of future prices to deliver adequate generation and demand side response the energy union argues against feed in tariffs fits for renewables pressing for premium fits pfits just as gb has abandoned pfits in favour of fits this paper draws on the gb experience of electricity market reform before and after the 2015 change of government to highlight promising resolutions of the energy trilemma and the problems that have arisen between the diagnosis of the problem and the delivery of solutions it sets out the theory and practice of delivering capacity energy and quality of supply gives a brief history of gb electricity from the cegb to its current unbundled liberalized and privatized structure that sheds light on the trilemma problem and discusses possible solutions the island of ireland single electricity market reforms illustrate the problem and possible answer of how best to deliver quality of service with high intermittency

a market approach to long term security of supply the problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process although ideally the market itself should be enough to provide adequate investment incentives there are several factors that prevent this result from being achieved and some actual markets have already experienced problems related with a lack of generation capacity a regulatory framework to address this question is presented the procedure is based on an organized market where reliability contracts based on financial call options are auctioned so both their price and their allocation among the different plants are determined through competitive mechanisms this results in a stabilization of the income of the generators and provides a clear incentive for new generation investment with a minimum of regulatory intervention additionally the method represents a market compatible mechanism to hedge demand from the occurrence of high market prices

national capacity mechanisms in the european internal energy market opening the doors to neighbours abstract after decades of strong opposition several european countries are now in the process of implementing some kind of capacity remuneration mechanism crm unfortunately these national initiatives seem to aim at energy autarky rather than seeking a wider regional coordination this situation can significantly affect the potential benefits of an integrated long term expansion of the european power system in this paper the regulatory basis for the effective participation of foreign agents in national crms is discussed the authors support that two pillars are required 1 stronger coordination among tsos 1 and respect for the security of supply directive and 2 introduce a particular type of firm cross border nominations associated to the crms commitments these proposed nominations are to be considered only in situations of system stress as discussed here this allows not requiring any type of ex ante cross border capacity reservation thus avoiding many of the inefficiencies associated to traditional physical bilateral contracts

review of the security of supply in turkish energy markets lessons from the winter shortages abstract turkey has changed the essentials of its energy markets more than a decade ago it was mainly a transition from a state led model to a free market one although some levels of progress is observable security of supply particularly in times of short term supply disruption had not been widely tested harsh winter conditions set a litmus test for turkish energy markets basing on the this test this paper provides an analysis of to what extent turkey is open to the risks of energy supply security and discusses possible measures to relieve future supply disruption risks energy policy making should consider the fact that electricity and gas markets are highly intertwined in turkey and security of supply measures could have cross market implications paper concludes

on the efficient market diffusion of intermittent renewable energies abstract capacity costs of renewable energies have been decreasing dramatically and are expected to fall further making them more competitive with fossils building on an analytically tractable peak load pricing model we analyze how intermittency of renewable energies affects the market diffusion that results from these lower costs in particular once renewables have become competitive by attaining the same levelized cost of electricity lcoe as fossils the marginal increase in efficient capacities due to a further cost reduction varies substantially initially it is small then it rises but it falls again once renewable capacities are large enough to satisfy the whole electricity demand at times of high availability if external costs of fossils are internalized by a pigouvian tax then perfect competition leads to efficient investments in renewable and fossil capacities even though we assume that only a subgroup of consumers can adapt their demand to price fluctuations that are caused by the intermittency of renewables moreover fossils receive a capacity payment through the market for their reliability in serving demand of non reactive consumers maximum electricity prices rise with the share of renewables if regulators impose a price cap this initially raises investments in renewables but the effect may reverse if the share of renewables is large

market based coordination of transmission and generation capacity planning we propose an iso model for coordinating transmission expansion planning with competitive generation capacity planning in electricity markets the purpose of the model is a holistic simulation of generation and transmission capacity expansion in the market environment the solution represents an iterative process for simulating the interactions among gencos transcos and the iso which might be terminated by the iso based on a pre specified stopping criterion the proposed model adopts a joint energy and transmission auction market and a capacity mechanism the joint auction market enables competition to occur among generation and transmission resources the capacity mechanism offers incentives for market participant investments that reflect the locational values of additional capacity transmission capacity expansion decisions are made by merchant transmission lines that recover their capacity investments through transmission marginal pricing and capacity payments transmission network security is reflected in the proposed competitive resource planning model the examples illustrate a coordinated planning of generation and transmission in restructured power systems

priority service pricing investment and market organization tingent forward delivery contracts offered by a seller each customer s selection of one contract from the menu determines the customer s service order or priority in each contingency the seller rations supplies by serving customers in order of their selected priorities until the supply is exhausted or all customers are served various forms of priority service are widely

bidding strategies with fuel supply uncertainty in auctions of long term energy call options this work develops a stochastic optimization model for the creation of a bidding strategy for a generator in an energy call option auction similar to brazil s i e where the bidder can offer both the premium and the strike price the objective of the model is to maximize the bidder s competitiveness while ensuring that the project s target rate of return is achieved with a given probability for example 95 the problem s complexity is compounded by uncertainties in fuel supply and the need to switch between fuels the generators face the conundrum of bidding a single strike price to cover the expenses generated by using multiple types of fuels we address the problem of finding bidding strategies which taking into account uncertainty in fuel supply and risk constraints set the combination of strike price and option premium that ensure a desired risk adjusted return for greenfield dual fuel thermal plants

adapting electricity markets to decarbonisation and security of supply objectives toward a hybrid regime abstract the policy objectives of decarbonisation of the electricity sector whilst maintaining security of supply have led to a new wave of market reforms in many jurisdictions which liberalised their industry there is a wide range of models under this new hybrid regime which essentially combine the energy market with planning and long term risk transfer arrangements this paper takes an institutionalist approach in terms of modularity of the market design and reviews the issues with the standard historical market model which led to the introduction of additional long term modules we then study the interactions between the existing and new modules and identify ways in which the initial market modules can be improved to address inconsistencies with the new modules we conclude by discussing the conditions under which the various changes in market architectures could converge toward a hybrid regime structured around a two step competition with a competition for the market via the auctioning of long term contracts to support investment followed by competition in the market for short term system optimisation via the energy market

wholesale marginal prices in competitive generation markets wholesale marginal electricity prices are being used in several actual competitive generation markets worldwide both to remunerate generators and to charge consumption these prices must account not only for energy but also for guarantee of supply in the long and the short term this paper a provides a sound conceptual and quantitative foundation for wholesale pricing based on generation services where any existing restrictions in operation or planning in real power markets are accounted for b clearly establishes the relationship between short term marginal costs long term marginal costs and optimal wholesale electricity prices and c identifies the reasons for mismatches in cost recovery with marginal generation prices the theoretical results are verified with a detailed realistic power system model

does sharecropping affect long term investment evidence from west bengal s tenancy reforms in india land reform has been high on the political agenda since independence in 1947 and early efforts at abolishing intermediaries are widely credited with having brought about significant social benefits the most prominent type is tenancy reform as it does not extinguish landlords ownership rights tenants who may have benefited from rent ceilings and cannot be evicted still have to pay annual share rent this weakness of rights may fail to create the incentives for effort supply and long term investment that have underpinned the success of land reforms elsewhere effectively adding a dynamic inefficiency to the disincentives created by the marshallian inefficiency of sharecropping this could imply that despite the high political price of implementing land reform in india the schemes so far have failed to reach their productivity and poverty reduction potential

a reactive power capacity market using annual auctions this paper presents a new approach to design reactive power capacity markets under this approach annual auctions to procure reactive power capacity are conducted by the system operator two products are defined reactive power generation and absorption capacity which can be supplied by different independent var sources such as generators svcs capacitor banks and shunt reactors reactive power capacity is allocated using an optimization algorithm that matches capacity bids and system reactive power needs for peak and low demand hours the reactive power requirements are calculated taking into account system contingencies and the dynamic performance of the var sources under these situations another key proposal of the paper is the distribution of costs of the reactive power capacity market to the agents responsible for contingencies according to the use of the service by each market participant this remuneration approach provides fair and efficient economic signals to all market participants the applicability of the approach is illustrated with two case studies

real options theory applied to electricity generation projects a review abstract real options ro theory is well known for enhancing the value of projects under uncertainty this is achieved by modelling the flexibility that managers possess to adjust the projects in response to changes in their environments based on this ro theory could be used to tackle current energy and environmental issues by enhancing the value of electricity generation projects egp especially renewable energy projects rep the potential of ro theory to increase the value of egp and rep has been a driver for new research in the topic however existing literature is still scarce diverse and tends to neglect the state of the art of ro theory e g ro in the design of projects ro studies tend to ignore the use of ro in the design of projects as they are difficult to formulate without the help of experts on the projects designs this paper aims to encourage novel research in the application of ro theory to egp and rep for this purpose a critical review of ro theory its state of the art and its applications to egp and rep is presented this review identifies current areas of interest and gaps in knowledge in this research area it is concluded that new and novel ro research should address the state of the art of ro theory and uncertainties that are exclusive for specific types of projects this future research will require the involvement of electrical engineers specialised in the design of egp and rep

investment incentives in the korean electricity market abstract this paper develops a model based analysis of the effects of various capacity incentive systems on new investment in the korean electricity market the restructuring process in korea allocated power generation to six firms competing within a wholesale market albeit strictly on a cost basis because of this cost based pool capacity payments were also introduced to encourage new investment however it is an open question whether the current fixed capacity payment scheme is enough to secure resource adequacy and consideration is being given to alternative mechanisms such as the use of lolp using a detailed market simulation model based on system dynamics we compare these approaches in terms of how they may influence the investors decisions and thereby determine the system reserve margin the simulation results suggest that there may be serious problems in staying with the current fixed capacity payments in order to achieve resource adequacy in contrast an lolp based capacity mechanism may in the longer term increase the reserve margin compared with a fixed capacity payment more generally this paper indicates how crucial the effective modeling of the investment behavior of the independent power producers is for adequate policy support even if they only constitute a fringe in a substantially centrally influenced market

security constrained resource planning in electricity markets we propose a security based competitive generation resource planning model in electricity markets the objective of the model is to introduce the impact of transmission security in a multi genco generation resource planning the proposed approach is based on effective decomposition and coordination strategies lagrangian relaxation and benders decomposition are applied to decompose the original planning problem into tractable optimization subproblems locational price signal and security signal are defined for the simulation of competition among gencos and the coordination of security between gencos and the regulatory body iso the numerical examples exhibit the effectiveness of the proposed generation planning model in electricity markets

the demand for operating reserves key to price spikes and investment under regulation operating reserve policy and investment policy are completely separate in a market they are tightly linked through expectations currently regulators and engineers intervene in markets to determine how much will be paid when operating reserves are in short supply these prices largely determine the revenue stream that pays the capital costs of new peakers and pays an equal amount toward the capital costs of all other generators in this way operating reserve and price cap policies determine investment in generation and the equilibrium level of installed capacity typically ferc determines a price limit and engineers by setting an operating reserve requirement determine the expected duration of price spikes currently these policies are set without coordination and without analysis of the long run consequences

vertical integration credit ratings and retail price settings in energy only markets navigating the resource adequacy problem abstract energy only markets are prone to the resource adequacy problem i e the timely entry of new plant the reason for this is that competitive energy only markets struggle to be remunerative given reliability constraints and market price caps historically australia s 45 000 mw national electricity market has managed to navigate this well understood problem albeit with government entities directly or indirectly responsible for a surprisingly large 73 of all new plant investments to 2007 but government involvement in direct investment has now ceased so what will enable the industry to navigate the resource adequacy problem into the future quite simply industrial organisation the presence of merchant utilities with investment grade credit ratings and setting any regulated retail prices or price to beat with an lrmc floor

a critical assessment of the different approaches aimed to secure electricity generation supply abstract since the very beginning of the power systems reform process one of the key questions posed has been whether the market of its own accord is able to provide satisfactory security of supply at the power generation level or if some additional regulatory mechanism needs to be introduced and in the latter case which is the most suitable approach to tackle the problem this matter is undoubtedly gaining importance and it has taken a key role in the energy regulators agendas in this paper we critically review and categorize the different approaches regulators can opt for to deal with the problem of guaranteeing or at least enhancing security of supply in a market oriented environment we analyze the most relevant regulatory design elements throughout an updated assessment of the broad range of international experiences highlighting the lessons we have learned so far in a variety of contexts based on the analysis we conclude by providing a set of principles and criteria that should be considered by the regulator when designing a security of supply mechanism

resource adequacy reliability and the impacts of capacity subsidies in competitive electricity markets abstract motivated by recent interventions by the states of new jersey and maryland and the introduction of pjm s minimum offer price rule mopr for capacity markets we analyze the impact of subsidized government investments in electrical generation on electricity markets we extend the model of joskow and tirole 2007 to address the interconnected nature of the pjm grid by considering a market with two different locations connected by transmission lines we assume that these lines are constrained during peak periods in a manner similar to borenstein et al 2000 we find that government intervention has a significant potential for adverse effects on grid resource adequacy and reliability in our analysis subsidized investment in baseload capacity is never optimal in the short run government provision of base capacity displaces competitive base capacity which reduces the private provision of peak capacity in the long run the threat of intervention imposes costs on suppliers in the form of an expected regulatory taking as a result resource adequacy decreases in both markets if governments respond to this state of affairs by subsidizing further supply additions expectations of intervention are reinforced and competitive capacity supply further diminishes mopr attempts to mitigate this vicious cycle by screening out non economic bids for new capacity to the extent market participants view mopr as a credible policy it succeeds in this goal in this case subsidized capacity additions do not perturb the efficiency of market outcomes as long as any charges to consumers to support the subsidy are lump sum in nature in this case subsidized resources simply succeed in capturing rents from taxpayers

long term uncertainty evaluation of pool electricity markets abstract pool electricity markets are cleared under the strong assumption of having a perfectly known future in real life this is anything but true the inability to predict the random parameters of the supply and the demand function introduces risk into the market clearing process therefore the main interest is to minimize such risk by means of a trade off of the mean and the variance of the social cost function this paper considers random variations on the levels and on the slopes of the quadratic supply and demand functions correlation is considered between the corresponding coefficients of the supply and demand curves by means of the mean variance markowitz theory the risk introduced by these random variations is analyzed a comprehensive analysis on the effects that the mean variance markowitz theory has on the nodal spot prices and on the point elasticities of the supply and demand curves is made the non linear optimization model presented in this paper is validated through a three a six and a 21 node system

analysis of generation investment under different market designs in this paper a stochastic dynamic optimization model is used to analyze the effect of different market designs on generation investment and demand the expansion decisions of profit maximizing investors are simulated under four different market designs energy only capacity payment capacity obligation and capacity subscription the results show that the overall social welfare is reduced compared to a centralized social welfare optimization for the first three policies in particular an energy only market with a low price cap leads to insufficient generation investments capacity payments and obligations give additional investment incentives and more generating capacity but also result in a considerable transfer of wealth from consumers to producers due to the capacity payments in contrast the capacity subscription policy increases the social welfare and both producers and consumers benefit this is possible because capacity subscription explicitly utilizes differences in consumers preferences for uninterrupted supply this advantage must be weighed against the cost of implementation which is not included in the model

investing in electricity production under a reliability options scheme abstract reliability options ros are used to enhance the security of supply in electricity systems when a power producer writes a ro s he agrees to set a cap on the price of electricity that s he cashes in return the system operator i e the party that is buying the option pays to the option issuer a fixed premium in this paper we analyze how ros affect the timing and value of investments in the energy sector and we show under what conditions they can be used as investment stimuli we prove that contrarily to what is expected ros can potentially harm the security of supply by delaying the adoption of new capacity and by reducing the value of investing in it to avoid such a result a careful setting of the relevant parameters is needed

enhancing power supply adequacy in spain migrating from capacity payments to reliability options there has been total unanimity about the vital importance of reliability of supply since the beginning of the electricity sector deregulation process this paper describes the procedure proposed by perez arriaga et al 2005 white paper for the reform of the regulatory scheme of the power generation in spain for the ministry of industry tourism and trade of spain in spanish to improve upon the current scheme to guarantee a reasonable reserve margin the capacity payment mechanism this alternative design introduces improvements aimed at guaranteeing at least a minimum capacity reserve margin as well as at providing a strong incentive for generating units to be available when needed namely in situations when supply is likely to be insufficient to meet the total demand

transmission expansion in an oligopoly considering generation investment equilibrium abstract transmission expansion planning tep is a sophisticated decision making problem especially in an oligopolistic electricity market in which a number of strategic price maker producers compete together a transmission system planner who is in charge of making tep decisions requires considering the future generation investment actions however in such an oligopolistic market each producer makes its own strategic generation investment decisions this motivates the transmission system planner to consider the generation investment decision making problem of all producers within its tep model the strategic generation investment problem of each producer can be represented by a complementarity bi level model the joint consideration of all bi level models one per producer characterizes the generation investment equilibrium that identifies the future evolution of generation investment in the market this paper proposes a tri level tep decision making model to be solved by the transmission system planner whose objective is to maximize the social welfare of the market minus the expansion costs and whose constraints are the transmission expansion limits as well as the generation investment equilibrium problem this model is then recast as a mixed integer linear programming problem and solved numerical results from an illustrative example and a case study based on the ieee 14 bus test system demonstrate the usefulness of the proposed approach

strategic generation investment using a complementarity approach this paper provides a methodology to assist a strategic producer in making informed decisions on generation investment a single target year is considered with demand variations modeled through blocks the strategic behavior of the producer is represented through a bilevel model the upper level considers both investment decisions and strategic production actions and the lower level corresponds to market clearing prices are obtained as dual variables of power balance equations rival uncertainties on offering and investment are characterized through scenarios the resulting model is a large scale mixed integer lp problem solvable using currently available branch and cut techniques results pertaining to an illustrative example and a case study are reported and discussed

modeling generation expansion in the context of a security of supply mechanism based on long term auctions application to the colombian case abstract in an attempt to provide electricity generation investors with appropriate economic incentives so as to maintain quality of supply at socially optimal levels a growing number of electricity market regulators have opted for implementing a security of supply mechanism based on long term auctions in this context the ability to analyze long term investment dynamics is a key issue not only for market agents but also for regulators this paper describes a model developed to serve this purpose a general system dynamics inspired methodology has been designed to be able to simulate these long term auction mechanisms in the formats presently in place a full scale simulation based on the colombian system was conducted to illustrate model capabilities

risk constrained multi stage wind power investment when deciding on wind power investments three major issues arise the production variability and uncertainty of wind facilities the eventual future decline in wind power investment costs and the significant financial risk involved in such investment decisions recognizing the above important issues this paper proposes a risk constrained multi stage stochastic programming model to make optimal investment decisions on wind power facilities along a multi stage horizon the proposed model is illustrated using a clarifying example and a case study

contracting strategies for renewable generators a hybrid stochastic and robust optimization approach we present a new methodology to support an energy trading company etc to devise contracting strategies under an optimal risk averse renewable portfolio the uncertainty in the generation of renewable energy sources is accounted for by exogenously simulated scenarios as is customary in stochastic programming however we recognize that spot prices largely depend on unpredictable market conditions making it difficult to capture its underlying stochastic process which challenges the use of fundamental approaches for forecasting under such framework industry practices make use of stress tests to validate portfolios we then adapt the robust optimization approach to perform an endogenous stress test for the spot prices as a function of the buy and sell portfolio of contracts and renewable energy generation scenarios the optimal contracting strategy is built through a bilevel optimization model that uses a hybrid approach mixing stochastic and robust optimization the proposed model is flexible to represent the traditional stochastic programming approach and to express the etc s uncertainty aversion in the case where the price distribution cannot be precisely estimated the effectiveness of the model is illustrated with examples from the brazilian market where the proposed approach is contrasted to its stochastic counterpart and both are benchmarked against observed market variables

entry into the electricity market uncertainty competition and mothballing options the present paper analyzes the entry strategies into the electricity market of two firms that have power plants under price uncertainty and competition we consider the symmetric and asymmetric two firms which have either a thermal power plant or a nuclear power plant the differences between the thermal power plant and the nuclear power plant such as the cost structure and operational flexibility are modeled the threshold values of market entry are calculated for each firm with either the thermal power plant or the nuclear power plant as the leader or the follower we show the dependence of cost structures on entry thresholds of the leader and the follower into the electricity market for various market and cost conditions the diagrams of the leader are also shown

reliability payments to generation capacity in electricity markets abstract electric power is a critical input to modern economies generation adequacy and security of supply in power systems running under competition are currently topics of high concern for consumers regulators and governments in a market setting generation investments and adequacy can only be achieved by an appropriate regulatory framework that sets efficient remuneration to power capacity theoretically energy only electricity markets are efficient and no additional mechanism is needed nonetheless the energy only market design suffers from serious drawbacks therefore jointly with the evolution of electricity markets many remunerating mechanisms for generation capacity have been proposed explicit capacity payment was the first remunerating approach implemented and perhaps still the most applied however this price based regulation has been applied no without severe difficulties and criticism in this paper a new reliability payment mechanism is envisioned capacity of each generating unit is paid according to its effective contribution to overall system reliability the proposed scheme has many attractive features and preserves the theoretical efficiency properties of energy only markets fairness incentive compatibility market power mitigation and settlement rules are investigated in this work the article also examines the requirements for system data and models in order to implement the proposed capacity mechanism a numerical example on a real hydrothermal system serves for illustrating the practicability of the proposed approach and the resulting reliability payments to the generation units

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

a 100 year review of electricity policy in ireland 1916 2015 abstract over the past century ireland s electricity sector has undergone a significant transformation this paper documents the nation s struggle to build an electricity system to improve security of electricity supply through portfolio diversification and to promote indigenous energy sources this was a challenge for an electrically isolated island with little natural resources the paper also identifies the ineffective policy decisions that left ireland exposed to the 1970s energy crises the crises did however provide a clear impetus for focusing irish energy policy going forward the successful deployment and integration of large scale wind power was due to strong national and supranational policy decisions in 2015 ireland had the third highest wind energy share of national electricity demand 22 8 of all iea wind member countries the paper also traces ireland s transition through market reform regional fragmentation and looks onwards to the eu internal market for electricity in essence this paper provides a holistic view of the implications of various policy decisions on the electricity sector along with the stresses of external factors on the electricity market and should be useful for policy makers elsewhere faced with similar decisions

the use of real options approach in energy sector investments abstract energy shortage global warming and climate change led to an increase in the use of alternative sources of energy with renewable energy sources res playing a fundamental role in this new energetic paradigm however the investment costs often constitute a major barrier to their spread use moreover the overall benefits of renewable energy technologies are often not well understood and consequently they are often evaluated to be not as cost effective as traditional technologies from the moment that the energy sector started a deregulation process with a high level of competitiveness and associated increased market uncertainty traditional project evaluation techniques alone became insufficient to properly deal with these additional risk and uncertainty factors the diffusion of the renewable energy technologies is also affected by this feature the way investors evaluate their investments call now for the use of more sophisticated evaluation techniques real options approach can deal with these issues and as so began to be considered and applied for the energy sector decision aid this approach it is now extensively widespread in evaluating investment projects in the energy sector a large set of applications in almost all fields of energy decision making from electricity generation technologies appraisal to policy evaluation is available in the literature however the use of this technique in the field of res is still limited and worth to be analysed this paper addresses this issue a review of the current state of the art in the application of real options approach to investments in non renewable energy sources and res is presented giving perspectives for further research in this field

congestion driven transmission planning considering the impact of generator expansion this paper presents a multi year transmission expansion planning tep model which considers the transmission congestion and the impact of generation investment cost in the planning horizon the benders decomposition approach is utilized which decomposes tep into a master problem and two subproblems representing security and optimal operation the operation cost due to congestion occ is considered in the proposed model given that the congestion level is a proper criterion for measuring the degree of competitiveness in an electricity market the model evaluates sensitivity of the optimal tep to congestion level planning horizon and financial constraints regulators can utilize the proposed results to provide long term tep to market players and to develop incentive mechanisms to trigger generation investments the proposed approach is applied to a hypothetical system and turkish power system

real option valuation of facts investments based on the least square monte carlo method efficient and well timed investments in electric transmission networks that cope with the large ongoing power market uncertainties are currently an open issue of significant research interest strategic flexibility for seizing opportunities and cutting losses contingent upon an unfavorable unfolding of the long term uncertainties is an attribute of enormous value when assessing irreversible investments in this sense flexible ac transmission systems facts devices appear as an effective manner of adding flexibility to the transmission expansion planning this article proposes an investment valuation approach which properly assesses the option value of deferring transmission lines investments whereas gaining flexibility by investing in facts devices the flexibility provided by facts investments option to abandon and to relocate is assessed through a real option valuation approach based on the novel least square monte carlo method in order to illustrate the practicability of the proposed valuation approach a traditional expansion strategy lines and a flexible investment strategy lines and facts are compared in a real study case the article shows that a proper combination of lines and facts leads to efficient investments by allowing a progressive adaptation of the transmission grid to the changing scenarios