Advanced Search
MyIDEAS: Login to save this paper or follow this series

Using Forward Markets to Improve Electricity Market Design

Contents:

Author Info

Abstract

Forward markets, both medium term and long term, complement the spot market for wholesale electricity. The forward markets reduce risk, mitigate market power, and coordinate new investment. In the medium term, a forward energy market lets suppliers and demanders lock in energy prices and quantities for one to three years. In the long term, a forward reliability market assures adequate resources are available when they are needed most. The forward markets reduce risk for both sides of the market, since they reduce the quantity of energy that trades at the more volatile spot price. Spot market power is mitigated by putting suppliers and demanders in a more balanced position at the time of the spot market. The markets also reduce transaction costs and improve liquidity and transparency. Recent innovations to the Colombia market illustrate the basic elements of the forward markets and their beneficial role.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cramton.umd.edu/papers2005-2009/ausubel-cramton-forward-markets-in-electricity.pdf
File Function: Full text
Download Restriction: no

Bibliographic Info

Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number 09ufm.

as in new window
Length: 11 pages
Date of creation: 2009
Date of revision: 2009
Publication status: Published in Utilities Policy, 18, 195-200, 2010
Handle: RePEc:pcc:pccumd:09ufm

Contact details of provider:
Postal: Economics Department, University of Maryland, College Park, MD 20742-7211
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu

Related research

Keywords: Auctions; electricity auctions; market design; forward markets;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Cramton, Peter & Stoft, Steven, 2008. "Forward reliability markets: Less risk, less market power, more efficiency," Utilities Policy, Elsevier, Elsevier, vol. 16(3), pages 194-201, September.
  2. Oren, Shmuel S., 2005. "Generation Adequacy via Call Options Obligations: Safe Passage to the Promised Land," The Electricity Journal, Elsevier, Elsevier, vol. 18(9), pages 28-42, November.
  3. Peter Cramton, 2007. "Colombia’s Forward Energy Market," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 07fem, University of Maryland, Department of Economics - Peter Cramton, revised 2007.
  4. Peter Cramton & Steven Stoft, 2007. "Colombia Firm Energy Market," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 07cfem, University of Maryland, Department of Economics - Peter Cramton, revised 2007.
  5. Peter Cramton & Steven Stoft, 2006. "The Convergence of Market Designs for Adequate Generating Capacity," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 06mdfra, University of Maryland, Department of Economics - Peter Cramton, revised 2006.
  6. Lawrence M. Ausubel & Peter Cramton, 2004. "Auctioning Many Divisible Goods," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 04jeea, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  7. Peter Cramton & Steven Stoft & Jeffrey West, 2006. "Simulation of the Colombian Firm Energy Market," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 06scfem, University of Maryland, Department of Economics - Peter Cramton, revised 2006.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Arango, Santiago & Larsen, Erik, 2011. "Cycles in deregulated electricity markets: Empirical evidence from two decades," Energy Policy, Elsevier, Elsevier, vol. 39(5), pages 2457-2466, May.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pcc:pccumd:09ufm. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Cramton).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.