Managing a hydro-energy reservoir: A policy approach
Liberalisation and privatisation have increased the need to gain more understanding into the management of hydro storage (HS) plants. We analyse what types of reservoir management policies enable an owner or a public authority to achieve their respective objectives. By "policy" we understand simple, easily applicable decision rules, which enable a decision maker to decide when and how much to produce based on currently available information. We use a stylised deterministic simulation model of a hydro-power producer (HP) who behaves strategically. We study a non-liberalised market, where the authorities aim to minimise the total electricity cost for customers and a liberalised market where the HP attempts to maximise his contribution. This enables us to evaluate the impact of the liberalisation of HS production decisions on production volumes and electricity prices. We conclude that imposing rigid policies with the aim of limiting the potential for strategic behaviour can create incentives to produce only at very high prices throughout the year. This can lead to very high total costs, especially when the producer has most flexibility (large reservoirs combined with large turbine capacity). More surprisingly, we observe lower total production in a non-liberalised market.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Green, Richard & Newbery, David M G, 1991.
"Competition in the British Electricity Spot Market,"
CEPR Discussion Papers
557, C.E.P.R. Discussion Papers.
- Green, Richard J & Newbery, David M, 1992. "Competition in the British Electricity Spot Market," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 929-53, October.
- Amobi, Marilyn Chikaodili, 2007. "Deregulating the electricity industry in Nigeria: Lessons from the British reform," Socio-Economic Planning Sciences, Elsevier, vol. 41(4), pages 291-304, December.
- Banfi, Silvia & Filippini, Massimo & Luchsinger, Cornelia, 2002. "Deregulation of the Swiss Electricity Industry: Short-Run Implications for the Hydropower Sector," The Electricity Journal, Elsevier, vol. 15(6), pages 69-77, July.
- Tjalling C. Koopmans, 1957. "Water Storage Policy in a Simplified Hydroelectric System," Cowles Foundation Discussion Papers 26, Cowles Foundation for Research in Economics, Yale University.
- Stefan Ambec & Joseph Doucet, 2003. "Decentralizing hydro power production," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 587-607, August.
- Garcia, Alfredo & Reitzes, James D & Stacchetti, Ennio, 2001. "Strategic Pricing when Electricity is Storable," Journal of Regulatory Economics, Springer, vol. 20(3), pages 223-47, November.
- Crampes, C. & Moreaux, M., 2001. "Water resource and power generation," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 975-997, May.
- Ford, Andrew, 1999. "Cycles in competitive electricity markets: a simulation study of the western United States," Energy Policy, Elsevier, vol. 27(11), pages 637-658, October.
- M. Afshar & R. Moeini, 2008. "Partially and Fully Constrained Ant Algorithms for the Optimal Solution of Large Scale Reservoir Operation Problems," Water Resources Management, Springer, vol. 22(12), pages 1835-1857, December.
- Massimo Filippini & Silvia Banfi & Cornelia Luchsinger, 2002. "Deregulation of the Swiss Electricity Industry: Implication for the Hydropower Sector," CEPE Working paper series 02-13, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Von der Fehr, N.H.M. & Harbord, D., 1992.
"Spot Market Competition in the UK Electricity Industry,"
09/1992, Oslo University, Department of Economics.
- von der Fehr, Nils-Henrik Morch & Harbord, David, 1993. "Spot Market Competition in the UK Electricity Industry," Economic Journal, Royal Economic Society, vol. 103(418), pages 531-46, May.
- Sailor, D.J & Pavlova, A.A, 2003. "Air conditioning market saturation and long-term response of residential cooling energy demand to climate change," Energy, Elsevier, vol. 28(9), pages 941-951.
- Ford, Andrew & Geinzer, Jay, 1990. "Adding uncertainty to least-cost planning : A case study of efficiency standards in the Northwest," Energy Policy, Elsevier, vol. 18(4), pages 331-339, May.
- Gary, Shayne & Larsen, Erik Reimer, 2000. "Improving firm performance in out-of-equilibrium, deregulated markets using feedback simulation models," Energy Policy, Elsevier, vol. 28(12), pages 845-855, October.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:7299-7311. 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: (Zhang, Lei)
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.