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Assessing welfare impact of entry into power market

Author

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  • Cho, In-Koo
  • Kim, Hyunsook

Abstract

This paper calculates the welfare impact of a new entrant based on the location of entry in the Korean electricity market. We use two different models. One is the optimal fuel mix model to estimate the effect of a new entry in the long run. The other is the variable cost minimization model to assess the contribution of an existing installed private generator in the short run. A specific private generator, which has a cost advantage, saves a substantial amount of system-wide variable costs. We show that the right location for a new entrant can save power generation costs significantly, even if a new entrant does not have a cost advantage.

Suggested Citation

  • Cho, In-Koo & Kim, Hyunsook, 2013. "Assessing welfare impact of entry into power market," Energy Policy, Elsevier, vol. 61(C), pages 1046-1054.
    • Handle: RePEc:eee:enepol:v:61:y:2013:i:c:p:1046-1054
    DOI: 10.1016/j.enpol.2013.05.124
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    References listed on IDEAS

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    1. In-Koo Cho & Hyunsook Kim, 2007. "Market Power and Network Constraint in a Deregulated Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-34.
    2. Kim, Hyunsook & Kim, Sung-Soo, 2012. "The resource adequacy scheme in the Korean electricity market," Energy Policy, Elsevier, vol. 47(C), pages 133-144.
    3. Kim, Hyunsook & Kim, Sung-Soo, 2010. "The optimal fuel mix and redistribution of social surplus in the Korean power market," Energy Policy, Elsevier, vol. 38(12), pages 7929-7938, December.
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