(1) Modelling RETA: A Model of Forward Trading and the Balancing Mechanism AND (2) Rebidding in the Balancing Mechanism: An Economic Analysis
(1) The authors solve a two-stage model of electricity trading, with a forward market and a pay-bid balancing mechanism. They derive balancing mechanism strategies for generators which have sold forward and been scheduled to run, and for those which have not. Given these strategies, we can derive arbitrage conditions on the forward prices at which buyers and generators would be willing to trade. The market equilibrium implies that the expected level of output would be sold forward, and the expected price in the balancing mechanism would be equal to the marginal cost of this level of output. AND (2) Generators compete to sell extra power to the system operator in a balancing mechanism. The quantity required is equal to the sum of two random shocks. If bids are made before either shock is known, the average price paid will rise with the quantity demanded, but by much less than marginal cost. If those bidders who have not been scheduled after the first shock are allowed to change their bids, the expected average price paid will be more responsive to the quantity demanded (without changing any generator's expected revenues), but the correlation between price and quantity will be
|Date of creation:||May 1999|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.econ.cam.ac.uk/index.htm|
When requesting a correction, please mention this item's handle: RePEc:cam:camdae:0002. 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: (Jake Dyer)
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.