a game theoretic approach for optimal time of use electricity pricing demand for electricity varies throughout the day increasing the average cost of power supply time of use tou pricing has been proposed as a demand side management dsm method to influence user demands in this paper we describe a game theoretic approach to optimize tou pricing strategies gt tou we propose models of costs to utility companies arising from user demand fluctuations and models of user satisfaction with the difference between the nominal demand and the actual consumption we design utility functions for the company and the users and obtain a nash equilibrium using backward induction in addition to a single user type scenario we also consider a scenario with multiple types of users each of whom responds differently to time dependent prices numerical examples show that our method is effective in leveling the user demand by setting optimal tou prices potentially decreasing costs for the utility companies and increasing user benefits an increase in social welfare measure indicates improved market efficiency through tou pricing

the reformed eu ets intertemporal emission trading with restricted banking abstract with the increase of the linear reduction factor the implementation of the market stability reserve and the introduction of the cancellation mechanism the eu ets changed fundamentally we develop a discrete time model of the intertemporal allowance market that accurately depicts these reforms assuming that prices develop with the hotelling rule as long as the aggregated bank is non empty a sensitivity analysis ensures the robustness of the model results regarding its input parameters the accurate modelling of the eu ets allows for a decomposition of the effects of the individual amendments and the evaluation of their cost effectiveness the market stability reserve shifts emissions to the future but is allowance preserving a one time cancellation reduces the overall emission cap increasing allowance prices in the long run but does not significantly impact the emission and price path in the short run the increased linear reduction factor leads with 9 billion cancelled allowances to a stronger reduction than the cancellation mechanism and is therefore the main price driver of the reform

a multiperiod energy acquisition model for a distribution company with distributed generation and interruptible load this paper presents a multiperiod energy acquisition model for a distribution company disco with distributed generation dg and interruptible load il in a day ahead electricity market assuming that cost information for individual generation companies gencos and discos is known the disco s energy acquisition strategy is modeled as a bilevel optimization problem with the upper subproblem representing individual discos and the lower subproblem representing the independent system operator iso the upper subproblem maximizes individual discos revenues the lower subproblem simulates the iso s market clearing problem that minimizes generation costs and compensation costs for interrupting load the bilevel problem is solved by a nonlinear complementarity method an 8 bus system is employed to illustrate the proposed model and algorithm in particular the roles of dgs and ils to alleviate congestion are analyzed

the social cost of carbon with economic and climate risks uncertainty about future economic and climate conditions substantially affects the choice of policies for managing interactions between the climate and the economy we develop a framework of dynami

a distribution company energy acquisition market model with integration of distributed generation and load curtailment options this work presents a novel day ahead energy acquisition model for a distribution company disco in a competitive market based on pool and financial bilateral contracts the market structure encompasses wholesale generation companies distributed generation dg units of independent producers dg units owned by the disco and load curtailment options thus while satisfying its technical constraints the disco purchases active and reactive power according to the offers of dg units customers and the wholesale market the resulting optimal power flow model is implemented with an object oriented approach which is solved numerically by making use of a branch and border sequential quadratic programming algorithm the model is validated in test systems and then applied to a real case study results show the general applicability of the proposed model with potential cost savings for the disco finally the analysis of lagrange multipliers gives valuable information which can be used to improve the market design and to extend the use of the model to a more general market structure such as a power exchange

agent based analysis of the impact of the imbalance pricing mechanism on market behavior in electricity balancing markets abstract the imbalance pricing mechanism is an important design variable within european type electricity balancing markets that determines the incentives given to so called balance responsible parties brps to balance their electricity production and consumption portfolio to analyze the impact of alternative imbalance pricing mechanisms on balancing market performance an agent based model has been built in which the brps are the agents that decide autonomously in each round on their balancing strategy based on results in past rounds six alternative mechanisms are analyzed it is concluded that aiming for a small long position is generally the preferable brp strategy different imbalance pricing mechanisms lead to comparable system imbalances but single pricing results in the lowest imbalance costs for the brps and for the market as a whole

optimal alliance strategies among retailers under energy deviation settlement mechanism in china s forward electricity market an energy deviation settlement eds mechanism has been proposed to settle the deviation between consumption and energy contracts in china s forward electricity market due to high eds costs of electricity retailers a deviation mutual insurance dmi mechanism is put forward representing an option for electricity retailers to reduce the deviation through contract transfer given this background an optimal alliance strategy is proposed to maximize the utility of different types of individual electricity retailers the alliance income model considers the eds cost reduction and the cooperation cost analyzed based on transaction cost theory tct an improved income allocation method which considers distribution indexes selected by game theory and resource dependence theory rdt is proposed to ensure the comprehensive and reasonable allocation of alliance income considering the expected income and financial risk an evaluation model using conditional value at risk cvar as the financial risk assessment indicator is presented to measure the stability of alliances simulations based on data from a provincial electricity market in china illustrate that the eds costs of retailers can be reduced by selecting appropriate partners for alliance in addition the proposed alliance income allocation method is more reasonable and more targeted than the cooperative game based methods

strategic offering for a wind power producer as a result of subsidies and technological maturity renewable electricity producers have grown in some jurisdictions to clearly dominant positions in the market under this context we propose an offering strategy for a wind power producer with market power that participates in the day ahead market as a price maker and in the balancing market as a deviator uncertainty pertaining to wind power production and balancing market price is represented through a set of correlated scenarios the proposed model is a stochastic mathematical program with equilibrium constraints mpec that can be recast as a tractable mixed integer linear programming milp problem which is solvable using available optimization software results from an illustrative example and two case studies show the effectiveness of the proposed model

risk assessment of virtual power plants offering in energy and reserve markets distributed energy resources ders can be integrated into a single entity namely virtual power plant vpp the integration enables them to participate in competitive wholesale electricity markets according to the different types of uncertainty faced by different ders this integration can also act as a risk hedging mechanism providing a surplus profit in this paper using a two stage stochastic programming approach risk averse optimal offering model for a vpp trading in a joint market of energy and spinning reserve service is presented the conditional value at risk cvar is used to control the risk of profit variability uncertainties involved in generation of renewables consumption of loads calls for reserve service as well as prices in the day ahead market the spinning reserve market rm and the balancing real time market bm are taken into consideration this paper assesses how total and surplus profits of vpp are affected by risk aversion participation in the rm and the pricing system in the bm for this purpose the role of the integration and the trends of energy and reserve transactions under both single and dual pricing systems in the bm are addressed in detail through a numerical study

application of games with incomplete information for pricing electricity in deregulated power pools the authors present a game theory approach to the problem of pricing electricity in deregulated marketplaces they assume that an independent operator receives bids by pool participants and defines transactions among participants by looking for the minimum price that satisfies the demand in the pool the competition among pool participants is modeled as a noncooperative game with incomplete information they assume that each pool participant knows its own operation costs but does not know his opponents operation costs the game with incomplete information is transformed into a game with complete but imperfect information and solved using the nash equilibrium idea the approach presented in this paper is geared towards providing support for pricing electricity in deregulated pools

towards a cost causation based tariff for distribution networks with dg this paper decomposes the effects of the transition from an average cost distribution tariff to a cost causation based distribution tariff in terms of time and location that uses nodal prices to recover losses and an extent of use method to recover fixed network costs based on use at coincident peak our decomposition is designed so that the effects of using coincident peak and location for fixed network charges as well as using marginal losses under constraints recovering the exact amount of losses and recovering exactly the cost of network service in total can be isolated and analyzed separately we apply our tariff transition and decomposition method to an example network with data from uruguay to isolate the various effects with and without a distributed generation dg resource we show moving to coincident peak charges and to fully charging for marginal losses while rebating the merchandising surplus through the fixed charges have the greatest effects on changes in distribution tariff charges dg provides countervailing cost changes to distribution tariffs for loads through loss reductions and the implicit creation of new network capacity for which it is paid the interaction of all these effects may lead to outcomes that are counter intuitive which further supports the need to decompose the tariff changes to fully understand the reasons for the direction and magnitude of changes in tariff charges in the transition to tariffs based more on cost causation

bargaining and sharing innovative knowledge we consider the problem of bargaining over the disclosure of interimresearch knowledge between two participants in an r d race for an ultimate patentable invention licence fee schedules that are functions of the amount of knowledge disclosed by the leading to the laggingagent are examined for their abilities to attain efficient outcomes andvarying shares of the surplus arising from disclosure in hersequential offers bargaining games the uninformed buyer is able to elicitfull disclosures without sharing the incremental surplus with any type ofthe licensor and thus do as well as a perfectly informed and discriminatingknowledge licensee

a holistic approach for planning natural gas and electricity distribution networks this paper presents a new planning expansion model of an electricity and natural gas distribution system that has high penetration of distributed generation based on natural gas the model entails lower investment costs as compared to traditional planning models that consider both systems electricity and natural gas as independent networks this model is especially convenient for utilities that own both systems as electricity and natural gas customers can derive benefits via electricity or natural gas tariffs if there are significant savings in investment costs for fast growing economies the merging of electricity and natural gas distribution systems is seen as a promising business opportunity in which economies of scope can have lower investment costs so there is a definite need for this type of approach

bargaining in a network of buyers and sellers abstract we analyze bargaining between buyers and sellers who are connected by an exogenously given network players can make repeated alternating public offers that may be accepted by any of the responders linked to each specific proposer our purpose is to find the conditions of the network which drive the price distribution in equilibrium this paper uses graph theory tools to provide necessary and sufficient conditions regarding the architecture of networks for the subgame perfect equilibrium of the bargaining game to coincide with the walrasian outcome

optimal generation mix with short term demand response and wind penetration demand response defined as the ability of load to respond to short term variations in electricity prices plays an increasingly important role in balancing short term supply and demand especially during peak periods and in dealing with fluctuations in renewable energy supplies however demand response has not been included in standard models for defining the optimal generation technology mix three different methodologies are proposed to integrate short term responsiveness into a generation technology mix optimization model considering operational constraints elasticities are included to adjust the demand profile in response to price changes including cross price elasticities that account for load shifts among hours as energy efficiency programs also influence the load profile interactions of efficiency investments and demand response are also modeled comparison of model results for a single year optimization with and without demand response shows peak reduction and valley filling effects impacting the optimal amounts and mix of generation capacity increasing demand elasticity also increases the installed amount of wind capacity suggesting that demand response yields environmental benefits by facilitating integration of renewable energy

possibility of relicensing and patent protection abstract we examine the effects of patent protection paying attention to its role of prohibiting relicensing we focus on two questions first whether does the innovator have an incentive of licensing the concealable easily kept secret if not licensed innovation in the case where patent protection is absent second what effects does patent protection have upon the innovator s payoff and the consumers welfare principal findings include the following in the case of nondrastic innovations in the sense of arrow the innovator has an incentive of licensing even without patent protection patent protection generally benefits the innovator but may cause damage to the consumers for large innovations for drastic innovations patent protection has no influence on licensing licensing never takes place regardless of whether it is provided or not

overlapping efforts in the eu emissions trading system abstract according to the phase iv 2021 2030 rules of the eu ets the total amount of emission permits allocated to firms is not fixed but endogenous this implies that a national climate policy that overlaps with the ets can have an impact on total aggregate emissions roughly speaking if firms increase their holdings of emission permits the total amount of permits allocated is reduced this paper analytically investigates how an overlapping national policy affects the aggregate bank of emission permits if marginal abatement costs are not too convex national climate policies increase banking and thus tend to reduce overall emissions

a social cost of carbon for almost every country this paper uses imputed national climate change impact functions to estimate national social costs of carbon which are largest in poor countries with large populations the national social costs of carbon of faster growing economies are less sensitive to the pure rate of time preference and more sensitive to the rate of risk aversion the pattern of national social costs of carbon is not sensitive to the assumed impact function climate sensitivity and scenario although the global social cost of carbon is income convergence raises the national social costs of carbon of poorer countries and lowers them for richer countries both global and national social costs of carbon are most sensitive to the income elasticity of climate change impacts a parameter about which we know little

an information good market with symmetrical externalities in 3 the author investigated how an information good is supplied from its owner to users through trades in a case where all the traders are located at geographically separated points and thus a transmission of the good implies certain costs and moreover its external effects are negligibly small in general however information goods possess negative external effects as seen from the following suppose a firm possessing a new technology gains a profit by monopolistically utilizing it once this technology is known to and used by other firms the firm can no longer enjoy its monopolistic position and might incur a significant loss of profit the aim of this paper is to analyze how a concealable information good with external effects is diffused from its monopolistic owner to demanders through trades generally information goods have their own peculiar properties among them we suppose in this paper the following typical ones the first one is a possibility of free replication namely each trader can replicate the good as many times as he wants without any cost immediately after he obtains it each replica is supposed to be exactly the same as the original good the second one is an indivisibility which implies that each trader gains a benefit just from one unit of the good the third one is an irreversibility in trading the good in the case of trading ordinary goods it would be possible for a buyer to return the good to a seller by cancelling the trade for information goods however this would not be possible since a buyer may replicate it immediately after he purchases because of free replication namely a seller must refuse a buyer s proposal to return it since a buyer might already have its replica the fourth one is a negative external effect mentioned above namely a benefit brought by the good is affected by how the good is possessed among other traders and if some trader newly gets it then the benefit for each possessor is decreased throughout this paper we further assume that costs for transmitting the good are negligibly small a new process for producing chemical products a new computer program and so on are information goods which we have in mind for further description of information goods refer to 1 2 and 5 here we remark that in the case of trading such an information good it might occur from free replication that once each demander owns the good he will

a theory of buyer seller networks this paper introduces a new model of exchange networks rather than markets of buyers and sellers it begins with the empirically motivated premise that a buyer and seller must have a relationship a link to exchange goods networks buyers sellers and the pattern of links connecting them are common exchange environments this paper develops a methodology to study network structures and explains why agents may form networks in a model that captures characteristics of a variety of industries the paper shows that buyers and sellers acting strategically in their own self interests can form the network structures that maximize overall welfare

communication networks externalities and the price of information information goods or information for short play an essential role in modern economies we consider a trading framework where information has some idiosyncratic value for each consumer exerts externalities and can be freely replicated and transmitted through links in a communication network prices paid for information are determined via the asymmetric nash bargaining solution with endogenous disagreement points this decentralized approach leads to unique prices and payoffs in any exogenous network we use these payoffs to find connection structures that emerge under different externality regimes in pre trade network formation stage an application to citation graphs results in eigenvector like measures of intellectual influence

bidding strategy of virtual power plant for participating in energy and spinning reserve markets part i problem formulation this paper addresses the bidding problem faced by a virtual power plant vpp in a joint market of energy and spinning reserve service the proposed bidding strategy is a non equilibrium model based on the deterministic price based unit commitment pbuc which takes the supply demand balancing constraint and security constraints of vpp itself into account the presented model creates a single operating profile from a composite of the parameters characterizing each distributed energy resources der which is a component of vpp and incorporates network constraints into its description of the capabilities of the portfolio the presented model is a nonlinear mixed integer programming with inter temporal constraints and solved by genetic algorithm ga

uniform marginal pricing for the remuneration of distribution networks a new method for distribution access via uniform pricing for the remuneration of distribution networks is presented the proposed approach merges in a unified framework the investments the optimal network operation requirements the effect of the price elasticity of demand and the application of hourly pricing for demand side management purposes hourly uniform marginal prices understood as tariffs of use of the network are obtained from maximum social welfare condition sending efficient signals to the utility and consumers related to the optimal operation of the grid and use of the energy at peak and valley hours this method is used in the context of a performance based ratemaking regulation to get model companies from operational optimized real networks capital fees are integrated in the marginal tariff of use by means of the new replacement value concept broadly used in yardstick competition the model is stated as a mixed integer linear optimization problem suitable to be solved through well known linear programming tools the methodology has been successfully tested in a 42 bus test distribution network

long run incremental cost pricing based on unused capacity this paper proposes a novel approach for providing long run incremental cost lric pricing in network charges the proposed approach makes use of the unused capacity of an exiting network to reflect the cost of advancing or deferring future investment consequent upon the addition of generation or load at each study node on a distribution network compared with existing approaches to lric pricing the proposed approach produces forward looking charges that reflect both the extent of the network needed to service the generation or load and the degree to which that network is utilized the efficacy of the proposed lric approach has been validated by a comparison with the established investment cost related pricing icrp method used for deriving transmission charges in great brain gb this paper draws on work undertaken in projects for western power distribution and ofgem office of gas and electricity markets u k however the views expressed in this paper are those of the authors

nodal pricing for distribution networks efficient pricing for efficiency enhancing dg as distributed generation dg becomes more widely deployed distribution networks become more active and take on many of the same characteristics as transmission we propose the use of nodal pricing that is often used in the pricing of short term operations in transmission as an economically efficient mechanism nodal pricing would properly reward dg for reducing line losses through increased revenues at nodal prices and signal prospective dg where it ought to connect with the distribution network applying nodal pricing to a model distribution network we show significant price differences between buses reflecting high marginal losses moreover we show the contribution of a dg resource located at the end of the network to significant reductions in losses and line loading we also show the dg resource has significantly greater revenue under nodal pricing reflecting its contribution to reduced line losses and loading

gaming based reserve constraint penalty factor analysis to ensure secure real time power system operations the system operator must schedule sufficient resources to meet energy demand and operating reserve requirements simultaneously under a joint real time energy reserve market regime a dominant market participant can exercise pricing power by withholding reserve capability or by marking up energy offers this paper examines the short term impact of the choice of reserve price cap on participant behavior and market outcomes a stackelberg game is utilized to analyze the strategic bidding behaviors of the dominant participants assuming a range of reserve price caps and market conditions the market participants play the role of the leaders while the independent system operator is treated as a follower the proposed model is applied to the new england electricity market the computed solutions show that although the reserve price cap is unable to eliminate physical withholding behaviors it disciplines the participants and limits incentives to withhold economically also it limits prices to a reasonable level during reserve shortage events when only supply side market power mitigation options are available absent any transmission improvements or effective demand response participation the reserve price cap remains an effective tool to mitigate the impact of the exercise of supplier market power

expecting the unexpected emissions uncertainty and environmental market design we study potential equilibria in california s cap and trade market for greenhouse gases ghgs based on information available before the market started we find large ex ante uncertainty in business as usual emissions and in the abatement that might result from non market policies much larger than the reduction that could plausibly occur in response to an allowance price within a politically acceptable range this implies that the market price is very likely to be determined by an administrative price floor or ceiling similar factors seem likely to be present in other cap and trade markets for ghgs

pricing energy and ancillary services in integrated market systems by an optimal power flow a detailed ac opf based formulation for procuring pricing and settling energy and ancillary service in simultaneous auctions by integrated market systems is presented the paper provides clear definitions of locational marginal prices for energy and ancillary service marginal prices in terms of lagrange multipliers the characteristics of the prices are analyzed especially when economic substitution among ancillary services is required the paper also evaluates the conditions under which opportunity costs are incurred to units that provide ancillary services it is particularly shown that the intuitive belief that the provision of regulation down service does not incur opportunity cost to the provider in general is not true

a model of intertemporal emission trading banking and borrowing abstract this paper provides a general treatment of emission trading banking and borrowing in an intertemporal continuous time model using optimal control theory the decentralized behavior of firms is shown to lead to the least cost solution attainable under joint cost minimization explicit solutions for the time paths of emissions and permit prices are derived when firms are allowed to both bank and borrow and when firms are only allowed to bank emission permits the policy implications of emission banking and borrowing are discussed

optimal offering and operating strategy for a large wind storage system as a price maker wind farms and energy storage systems are playing increasingly more important roles in power systems which makes their offering nonnegligible in some markets from the perspective of wind farm energy storage systems wf ess this paper proposes an integrated strategy of day ahead offering and real time operation policies to maximize their overall profit as participants with large capacity in electricity markets can influence cleared prices by strategic offering a large scaled wf ess is assumed to be a price maker in day ahead markets correspondingly the strategy considers influence of offering quantity on cleared day ahead prices and adopts linear decision rules as the real time control strategy these allow enhancing overall profits from both day ahead and balancing markets the integrated price maker strategy is formulated as a stochastic programming problem where uncertainty of wind power generation and balancing prices are taken into account in the form of scenario sets permitting to reformulate the optimization problem as a linear program case studies validate the effectiveness of the proposed strategy by highlighting and quantifying benefits comparing with the price taker strategy and also show the profit enhancement brought to the distributed resources

dynamic pricing design for demand response integration in power distribution networks this paper presents optimal pricing design for demand response dr integration in the distribution network in particular we study the energy scheduling problem for a load serving entity lse that serves two types of loads namely inflexible and flexible loads inflexible loads are charged under a regular pricing tariff while flexible loads enjoy a dynamic pricing tariff that ensures cost saving for them moreover flexible loads are assumed to be aggregated by several dr aggregators the interaction between the lse and its customers is formulated as a bilevel optimization problem where the lse is the leader and dr aggregators are the followers the optimal solution of this problem corresponds to the optimal pricing tariff for flexible loads the key advantage of the proposed model is that it can be readily implemented thanks to its compatibility with existing pricing structures in the retail market extensive numerical results show that the proposed approach provides a win win solution for both the lse and its customers

waiting to imitate on the dynamic pricing of knowledge we study the problem of an inventor who brings to the market an innovation that can be legally imitated imitators may enter the market by imitating the innovation at a cost or by buying from the inventor the knowledge necessary to reproduce and use the invention the possibility of contracting dramatically affects the need for patent protection our results show that i imitators wait to enter the market and the inventor becomes a temporary monopolist ii the inventor sells knowledge through contracts that allow resale by the imitators and iii under certain conditions the inventor s payoff increases with the number of imitators

the real time price elasticity of electricity the real time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices despite the importance empirical estimates of the real time elasticity are hardly available this paper provides a quantification of the real time relationship between total peak demand and spot market prices we find a low value for the real time price elasticity which may partly be explained from the fact that not all users observe the spot market price if we correct for this phenomenon we find the elasticity to be fairly low for consumers currently active in the spot market if this conclusion applies to all users this would imply a limited scope for government intervention in supply security issues

licensing information goods abstract a significant amount of research on patent licensing and the diffusion of knowledge is organized around static frameworks of analysis patent holders however may face a dynamic problem namely the intertemporal consistency problem of the durable goods monopolist that is induced by durability on the demand side licensing practices such as exclusive licensing contracts and most favored customer clauses allow patentees to solve or mitigate this dynamic consistency problem there are situations however where these practices are not possible either due to the nature of the patent the case of information goods or due to compulsory patenting laws we study the effects of the intertemporal consistency problem on patent licensing in these situations relative to the existing literature we obtain the following main results i all of the firms that remain in the industry will be using the innovation ii royalty licensing may be superior to fixed fee or auction licensing from the licensor s point of view iii social welfare and consumer surplus may be lower than when the patent holder can commit not to make additional sales iv even for non drastic innovations the price of the good that is produced may be lower than the competitive price corresponding to the initial situation before the innovation was discovered

photovoltaics and heat pumps limitations of local pricing mechanisms abstract demand side management has been proposed as one cornerstone for a future sustainable energy system local pricing may contribute to enable a smart behaviour of grid users by providing appropriate incentives in this paper we apply a local pricing algorithm on distribution grid level we analyse its effects for a typical german rural low voltage grid with high penetration of photovoltaics and heat pumps with households using electric heat pumps a potentially flexible consumer type is implemented in detail such setup is used to assess two issues firstly the exploited potential in terms of avoided curtailment and secondly redistributive effects of such local pricing mechanism under use of different stylized policy choices results show that even with given local incentives the consumption adjustment towards an efficient grid usage can frequently not be realized since complementarity of photovoltaics and space heating demand is limited and technical constraints do not allow to overcome this gap furthermore we show that despite limited merits in terms of system costs the redistributive effects of local pricing mechanisms are very significant

hierarchical decision making for aggregated energy management of distributed resources this paper presents a bilevel model for describing the interdependence of decisions between a retailer aggregator and the distributed resources owners that the former serves and represents decision making is performed in a hierarchical fashion the retailer performs the energy management of various resources indirectly price signals are used as incentives for inducing the entities owning the distributed resources in a behavior that optimizes the operation and economic profit of the microgrid that they compose the two level interaction is formulated mathematically as a mathematical programming problem with complementarity constraints while nonlinearities are replaced by equivalent linear expressions the results of a characteristic case study indicate the efficiency and scalability of the proposed model

economic analysis of transmission expansion planning with price responsive demand and quadratic losses by successive lp the growth of demand response programs and renewable generation is changing the economics of transmission planners and regulators require tools to address the implications of possible technology policy and economic developments for the optimal configuration of transmission grids we propose a model for economic evaluation and optimization of inter regional transmission expansion as well as the optimal response of generators investments to locational incentives that accounts for kirchhoff s laws and three important nonlinearities the first is consumer response to energy prices modeled using elastic demand functions the second is resistance losses the third is the product of line susceptance and flows in the linearized dc load flow model we develop a practical method combining successive linear programming with gauss seidel iteration to co optimize ac and dc transmission and generation capacities in a linearized dc network while considering hundreds of hourly realizations of renewable supply and load we test our approach for a european electricity market model including 33 countries the examples indicate that demand response can be a valuable resource that can significantly affect the economics location and amounts of transmission and generation investments further representing losses and kirchhoff s laws is also important in transmission policy analyses

an individual welfare maximization algorithm for electricity markets an algorithm that allows a market participant to maximize its individual welfare in electricity spot markets is presented the use of the algorithm in determining market equilibrium points called nash equilibria is demonstrated the start of the algorithm is a spot market model that uses the optimal power flow opf with a full representation of the transmission system and inclusion of consumer bidding the algorithm utilizes price and dispatch sensitivities available from the hessian matrix and gradient of the opf to help determine an optimal change in an individual s bid the algorithm is shown to be successful in determining local welfare maxima and the prospects for scaling the algorithm up to realistically sized systems are very good nash equilibria are investigated assuming all participants attempt to maximize their individual welfare this is done by iteratively solving the individual welfare maximization algorithm until all individuals stop modifying their bids

optimal investment planning for distributed generation in a competitive electricity market this paper proposes a new heuristic approach for distributed generation dg capacity investment planning from the perspective of a distribution company disco optimal sizing and siting decisions for dg capacity is obtained through a cost benefit analysis approach based on a new optimization model the model aims to minimize the disco s investment and operating costs as well as payment toward loss compensation bus wise cost benefit analysis is carried out on an hourly basis for different forecasted peak demand and market price scenarios this approach arrives at the optimal feasible dg capacity investment plan under competitive electricity market auction as well as fixed bilateral contract scenarios the proposed heuristic method helps alleviate the use of binary variables in the optimization model thus easing the computational burden substantially

optimization based bidding strategies in the deregulated market with the deregulation of electric power systems market participants are facing an important task of bidding energy to an independent system operator iso this paper presents a model and a method for optimization based bidding and self scheduling where a utility bids part of its energy and self schedules the rest as in new england the model considers iso bid selections and uncertain bidding information of other market participants with appropriately simplified bidding and iso models closed form iso solutions are first obtained these solutions are then plugged into the utility s bidding and self scheduling model which is solved by using lagrangian relaxation testing results show that the method effectively solves the problem with reasonable amount of cpu time

the impact of european balancing rules on wind power economics and on short term bidding strategies abstract wind power represents a significant percentage of the european generation mix and this will increase to fulfill the renewable energy targets different balancing rules are applied to wind power among the countries for instance to what extent wind power producers wpps are responsible for the energy imbalances and how those imbalances are penalized this paper discusses those different rules and evaluates their effects on wpp bidding strategies to do so a quantitative analysis is presented for an offshore wind farm considering the differences in the balancing rules and prices of belgium denmark germany and the netherlands the quantitative approach consists of a stochastic optimization model that maximizes the profits of a wpp by trading in different markets day ahead and intraday and computes the final energy delivered the model considers uncertainties of most important parameters such as wind energy forecasts and prices at different time frames the results show that the imbalance pricing design and the allocation of balance responsibility significantly affect wpp revenues additionally wpps deviate differently from the expected energy depending on the balancing rules which can impact the system furthermore these balancing rules should be considered with other market regulations such as the design of support schemes

a carbon price floor in the reformed eu ets design matters abstract despite the reform of the european emissions trading system eu ets discussions about complementing it with a carbon price floor cpf are ongoing this paper analyzes the effect of a european cpf in the reformed eu ets using a hotelling model of the eu ets amended by the market stability reserve msr and the cancellation mechanism two cpf designs are compared 1 a buyback program and 2 a top up tax the buyback program sets a minimum price for the allowances from the implementation year onwards after the announcement firms anticipate the cpf which immediately increases the carbon price to the discounted cpf level therefore firms emit less and bank more allowances leading to more intake into the msr and more cancellation of allowances the top up tax imposes a tax on emissions which enhances the market price of allowances to the cpf level from the implementation year onwards firms increase their short run emissions in anticipation of the upcoming tax only after the implementation year firms start to lower their emissions thus the effect on aggregate cancellation is ambiguous despite being equivalent in a static setting the design choice for the cpf matters in a dynamic context such as the eu ets

decomposition model and interior point methods for optimal spot pricing of electricity in deregulation environments in this paper an integrated optimal spot pricing model is presented first the proposed model includes the detailed derivation of optimal nodal specific real time prices for active and reactive powers and the method to decompose them into different components corresponding to generation loss and many selected ancillary services such as spinning reserve voltage control and security control the features of the proposed model are discussed in relationship to existing pricing models and classical economic dispatch the model is then implemented by modifying existing newton opf methods through interior point algorithms which can effectively avoid go no go gauge i e highly volatile in the calculation of spot prices case studies on 5 bus and ieee 30 bus systems are reported to illustrate the proposed method

a medium term decision model for discos forward contracting and tou pricing time varying prices by motivating customers to reduce their consumption in peak periods propel the electricity industry towards a higher efficiency compared to that of common flat prices focusing on time of use tou sale prices this paper establishes a stochastic model for the medium term decision making problem faced by a distribution company disco the developed model deals with the disco s decisions on the level of involvement in forward contracts and in the pool as well as the sale prices offered to customers the demand response to tou prices is captured using a price elasticity matrix pem the objective is to maximize the disco s profit while the exposure risk imposed by uncertainties is limited to a given level the model is formulated as a mixed integer linear programming milp problem that can be effectively solved via commercial software packages a typical finnish 20 kv urban distribution network is used to demonstrate the effectiveness of the developed model

a bilevel approach to operational decision making of a distribution company in competitive environments this paper presents a model for operational decision making of a distribution company disco with distributed generation dg and interruptible loads il in a competitive market the disco objective modeled through the upper level problem is to minimize the cost of market purchases and dg unit dispatch while taking into account the responses of the other discos this upper level problem is constrained by a lower level market clearing problem whose objective corresponds to maximization of social welfare such a setting results in a multi disco equilibrium problem formulated as an equilibrium problem with equilibrium constraints epec by combining the optimality conditions of all upper level problems using a nonlinear approach the epec problem is reformulated as a single nonlinear optimization model which is simultaneously solved for all discos the proposed approach is applied to an ac model of a power system to account for voltage and reactive power constraints of the transmission and distribution networks numerical examples based on two test systems are presented to illustrate the application of the proposed method

banking and borrowing in the eu ets a review of economic modelling current provisions and prospects for future design this article deals with the issue of banking and borrowing in the context of the european union emissions trading scheme eu ets by attempting to provide a policy oriented unifying theoretical framework after describing the main features of the eu ets the core part of the article consists of variations of an inter temporal continuous time optimization model additional elements include flexibility measures currently discussed and proposed in other emissions trading systems usa australia which include the use of safety valves minimum price auctioning or offsets from domestic or international projects

bi level approach to distribution network and renewable energy expansion planning considering demand response this paper presents a bi level model for distribution network and renewable energy expansion planning under a demand response dr framework the role of dr has recently attracted an increasing interest in power systems however previous models have not been completely adapted in order to treat dr on an equal footing the target of the distribution network and generation planner modeled through the upper level problem is to minimize generation and network investment cost while meeting the demand this upper level problem is constrained by the lower level problem stressing the importance of integrating dr to time varying prices into those investment models the objective function considered for the lower level is the minimization of overall payment faced by the consumers using the karush kuhn tucker complementarity constraints the proposed bi level model is recast as a mixed integer linear programming problem which is solvable using efficient off the shelf branch and cut solvers detailed results from an insular case study la graciosa canary islands spain are presented

how renewables will change electricity markets in the next five years photovoltaic pv cells onshore wind turbines internet technologies and storage technologies have the potential to fundamentally change electricity markets in the years ahead photovoltaic cells are the most disruptive energy technology as they allow consumers of all sizes to produce power by themselves new actors in the power market can begin operating with a new bottom up control logic unsubsidised pv markets may start to take off in 2013 fuelling substantial growth where pv power is getting cheaper than grid or diesel backup electricity for commercial consumers managing loads and achieving a good match between power consumption and weather dependent power production will likely become a key issue this consumption production balance may trigger massive innovation and investment in energy management technologies involving different kinds of storage and controls increasing autonomy and flexibility of consumers challenges the top down control logic of traditional power supply and pushes for a more decentralised and multi layered system how rapidly and smoothly this transformation occurs depends to a large extent on the adaptation speed of the regulatory framework and on the ability of market players to develop appropriate business models the paper discusses conflicts of interest hurdles and drivers opportunities and traps for this perspective

optimal contract pricing of distributed generation in distribution networks this paper proposes a bilevel programming approach to determine the optimal contract price of dispatchable distributed generation dg units in distribution systems two different agents are considered in the model namely the distribution company disco and the owner of the dg the former seeks the minimization of the payments incurred in attending the forecasted demand while the latter seeks the maximization of his profit to meet the expected demand the disco has the option to purchase energy from any dg unit within its network and directly from the wholesale electricity market a traditional distribution utility model with no competition among dg units is considered the proposed model positions the dg owner in the outer optimization level and the disco in the inner one this last optimization problem is substituted by its karush kuhn tucker optimality conditions turning the bilevel programming problem into an equivalent single level nonlinear programming problem which is solved using commercially available software tests are performed in a modified ieee 34 bus distribution network

a novel policy for locational marginal price calculation in distribution systems based on loss reduction allocation using game theory in this paper a novel locational marginal price lmp policy for distribution system with significant penetration of distribution generation dg in competitive electricity market is presented this new lmp method is based on remunerating dg units for their participation in reduced amount of energy losses in distribution systems brought about by participation of all dg units in supplying demand also this method is combined with an iterative solution this approach provides an efficient tool for distribution companies discos to estimate the state of the system in the next step which other existing approaches of lmp fail to provide this system state estimation finally in order to expand lmp method and provide effective prediction method for discos to estimate the day ahead state of the system ann tool is employed to predict the market price and demand for the next 24 h this lmp prediction is a powerful operational tool for disco to exert its control over private dg units however prediction methods contain error therefore uncertainty modeling is implemented for modeling the effect of error in prediction on the lmp calculation for the next day

resale proofness and coalition proof nash equilibria abstract this paper studies in detail the notion of resale proofness proposed by nakayama quintas and muto it is shown that in an information trading game with one initial owner of information the following are attained as equilibrium outcomes of the game the perfectly coalition proof nash equilibria due to bernheim peleg and whinston if a set of informed agents is resale proof information never diffuses further the initial owner shares his information with a set of demanders such that the resulting set of informed agents forms one of the minimal resale proof sets and the initial owner gains the whole surplus produced by the information sharing

communication and coordination in social networks i model people in a coordination game who use a communication network to tell each other their willingness to participate the minimal sufficient networks for coordination can be interpreted as placing people into a hierarchy of social roles or stages initial adopters then followers and so on down to late adopters a communication network helps coordination in exactly two ways by informing each stage about earlier stages and by creating common knowledge within each stage we then consider two examples first we show that low dimensional networks can be better for coordination even though they have far fewer links than high dimensional networks second we show that wide dispersion of insurgents people predisposed toward participation can be good for coordination but too much dispersion can be bad although collective action depends on both social structure and individual incentives these integral aspects have been formalized separately in the fields of social network theory and game theory by considering them together this paper engages the classic question of which structures are conducive to coordination and shows that structure and strategy are related in a mutually interesting way here we consider a coordination game in which each person wants to participate only if others participate social structure is thought of as a communication network by which people tell each other their willingness to participate each person knows whether her neighbours in the network are willing but does not know about anyone else our model is thus a game of incomplete information in which each person given his local knowledge decides whether to participate the main result is a characterization of the minimal sufficient networks for coordination in terms of a hierarchy of social roles or stages initial adopters then followers and so on down to late adopters for example a communication network helps coordination in exactly two ways by informing each stage about earlier stages and by creating common knowledge within each stage we also consider two simple examples first we show that low dimension or strong link networks can be better for coordination even though they have far fewer links than high dimension or weak link networks second we show that wide dispersion of insurgents people predisposed toward participation can be good for coordination but too much dispersion can be bad this paper is built on the assumption that the most basic and common mechanism for coordination is the i ll go if you go mechanism individuals first communicate with each other about their preferences and then each individual chooses whether to participate or not hence a person s participation depends on what he knows about his neighbours it does not depend solely on their participation itself either through learning adaptation or social influence the physical analogies of contagion or diffusion are not

a stochastic framework for short term operation of a distribution company this paper presents a stochastic framework for short term operation of a distribution company disco the proposed framework optimizes disco s operational decisions in two hierarchical stages the first stage called day ahead operation stage daos deals with the operational decisions on purchases from the day ahead market and commitment of distributed generation dg units the objective of this stage is to minimize the expected operating cost while the financial risk exposed by uncertain real time prices and loads is restricted to a given level the model associated with this stage is based on the mixed integer programming mip format the second stage named real time operation stage rtos deals with disco s activities in real time in rtos decisions are made on real time market transactions dispatch of online dgs and invocation of load curtailments lcs such that the expected operating cost is minimized this stage is formulated as a nonlinear programming nlp problem to investigate the effectiveness of the developed framework it is applied to a typical finnish 20 kv urban distribution network

electronic data interchange competitive externalities and strategic implementation policies electronic data interchange edi is an emerging type of standardized inter organizational information system we analyze the impact of edi on the upstream suppliers competitive position in a simple two level hierarchical market structure where the buyer faces a linear demand curve and the competing heterogeneous suppliers have an upward sloping marginal cost function we show that a suppliers adoption of edi can generate positive externalities for the buyer and negative or competitive externalities for other suppliers as a result the buyer provides a price premium to those suppliers who adopt edi and increases their sales volume and market share moreover when the benefits that the buyer can derive from implementing edi are substantial and the suppliers edi adoption costs are high it may be in the buyer s best interest to subsidize the suppliers so as to encourage them to adopt edi instead of mandating them to do so regardless of whether the buyer employs a mandatory or a subsidizing policy the buyer and the end consumers may be the only ones who gain from this new technology consequently a partial adoption by the supplier base may be optimal for the buyer when the suppliers adoption costs are sufficiently high we also show that while edi reduces the transaction costs of the buyer the upstream market tends to become more concentrated as a result of increased cost differentials these results provide one economic explanation of the fact that many companies have actually reduced their supplier base after implementing edi despite a significant reduction in their market transaction costs

a decentralized model of information pricing in networks we propose a recursive method of pricing an information good in a network of holders and demanders of this good the prices are determined via a unique equilibrium outcome in a sequence of bilateral bargaining games that are played by connected agents if the information is a homogenous non depreciating good without network effects we derive explicit formulae which elucidate the role of the link pattern among the players particularly we find out that the equilibrium price is intimately related to the existence of cycles in the network it is zero if a cycle covers the trading pair and it is proportional to the direct and indirect utility that the good generates otherwise

procrastinating reform the impact of the market stability reserve on the eu ets abstract we study the impact of the market stability reserve msr on price and emission paths of the eu ets from 2019 onwards the msr will adjust the number of allowances auctioned as a function of the size of the surplus i e in times of a large surplus it shifts the issue date of allowances into the future in a perfectly competitive allowance market the msr only affects price and emission paths if the baseline equilibrium becomes unfeasible if the msr is binding prices increase in the short run but drop in the medium run relative to the baseline the msr increases price variability if uncertainty over future allowance demand is resolved while there is a surplus the long run cap is unaffected by both the msr and overlapping climate policies this contrasts the eu s objectives of improving the resilience of the eu ets and increasing synergies with overlapping climate policies

short term strategies for dutch wind power producers to reduce imbalance costs the paper assesses bidding strategies for a wind power producer in the netherlands to this end a three stage stochastic optimization framework is used maximizing wind power producer s profit using the day ahead and cross border intraday market taking into account available interconnection capacity results show that the wind power producer can increase its profits by trading on the intraday market and under certain imbalance prices by intentionally creating imbalances it has been considered uncertainties about prices power forecast and interconnection capacity at the day ahead and intraday timeframes

opf for reactive pricing studies on the ngc system retail transmission services like those being provided by the national grid company ngc in england and wales pose new challenges for the pricing of reactive power supply a reactive power market approach has been proposed by ngc and continues to be evaluated such an approach includes a novel requirement for transmission constrained economic dispatch of var a problem in the security constrained optimal power flow opf class the problem formulations handled by the opf package in use could not accommodate ngc s requirements this paper describes the reactive pricing problem being addressed the modeling requirements and the resulting extensions made to the opf formulation and package it discusses the test results obtained to date on the ngc system

a novel policy for lmp calculation in distribution networks based on loss and emission reduction allocation using nucleolus theory this paper proposes a new policy to calculate the locational marginal price lmp in the distribution networks containing distributed generation dg the proposed policy is based on remunerating the dg units to reduce the loss and emission of the network lmp at each dg bus is calculated according to the contribution of the dg to the reduced amount of loss and emission an iterative algorithm which is based on the nucleolus theory is proposed to allocate the loss and emission reduction the proposed algorithm will provide a robust state estimation tool for distribution companies discos in the next step of operation the state estimation tool provides the decision maker with the ability to exert its control over private dg units when the loss and emission are minimized also the proposed pricing policy requires decision maker to simply apply its best response strategy to the lmp based on the priority of loss emission and disco s extra benefit the proposed methodology is applied to two realistic distribution networks and efficiency and accuracy of the method are verified