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Incentive based energy market design

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  • Muratore, Gabriella

Abstract

Current energy market designs and pricing schemes fail to give investors the appropriate market signals. In particular, energy prices are not high enough to attract investors to build new or maintain existing power capacity. In this paper we propose a method to compute second-best Pareto optimal equilibrium prices for any market exhibiting non-convexities and, based on this result, an energy market design able to restore the correct energy price signals for supply investors.

Suggested Citation

  • Muratore, Gabriella, 2011. "Incentive based energy market design," European Journal of Operational Research, Elsevier, vol. 213(2), pages 422-429, September.
    • Handle: RePEc:eee:ejores:v:213:y:2011:i:2:p:422-429
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    References listed on IDEAS

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    7. M. E. Paul, 1954. "Notes On Excess Capacity," Oxford Economic Papers, Oxford University Press, vol. 6(1), pages 33-40.
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    Cited by:

    1. Ying, Zhou & Xin-gang, Zhao & Zhen, Wang, 2020. "Demand side incentive under renewable portfolio standards: A system dynamics analysis," Energy Policy, Elsevier, vol. 144(C).
    2. Ensthaler, Ludwig & Giebe, Thomas, 2014. "Bayesian optimal knapsack procurement," European Journal of Operational Research, Elsevier, vol. 234(3), pages 774-779.

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