Long term locational prices and investment incentives in the transmission of electricity
We present a model of generation and network investment in a competitive electricity system. The model focuses on the duality of long-and short-term locational signals introduced in the European Regulation 1228/2003 for enhancing cross border trade of electricity among Member States. The model assumes that the market consists of spot and transmission submarkets. Generators, consumers and a TSO operate on that market; none of these agents has market power. Lumpiness of investments is one of the problems that may render generation and network adequacy difficult to achieve. We take up this question and apply some formalism formerly developed by O'Neill and co-authors for the unit commitment problem in order to construct multipart tariffs that insure the adequate development of the resources both in generation and the grid. In the process, we recover the standard nodal pricing as part of that multipart tariff. We address the questions of cost reflectiveness and non discrimination imposed by Regulation 1228/2003.
|Date of creation:||00 2005|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
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.:
- Crema, Alejandro, 1995. "Average shadow price in a mixed integer linear programming problem," European Journal of Operational Research, Elsevier, vol. 85(3), pages 625-635, September.
- Paul Joskow & Jean Tirole, 2005.
"Merchant Transmission Investment,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 53(2), pages 233-264, 06.
- Joskow, P. & Tirole, J., 2003. "Merchant Transmission Investment," Cambridge Working Papers in Economics 0324, Faculty of Economics, University of Cambridge.
- Joskow, Paul & Tirole, Jean, 2004. "Merchant Transmission Investment," IDEI Working Papers 263, Institut d'Économie Industrielle (IDEI), Toulouse.
- Paul Joskow & Jean Tirole, 2003. "Merchant Transmission Investment," NBER Working Papers 9534, National Bureau of Economic Research, Inc.
- Paul Joskow & Jean Tirole, 2003. "Merchant Transmission Investment," Working Papers 0304, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Bushnell, James B & Stoft, Steven E, 1996. "Electric Grid Investment under a Contract Network Regime," Journal of Regulatory Economics, Springer, vol. 10(1), pages 61-79, July.
- O'Neill, Richard P. & Sotkiewicz, Paul M. & Hobbs, Benjamin F. & Rothkopf, Michael H. & Stewart, William R., 2005. "Efficient market-clearing prices in markets with nonconvexities," European Journal of Operational Research, Elsevier, vol. 164(1), pages 269-285, July.
- Herbert Scarf, 1994. "The Allocation of Resources in the Presence of Indivisibilities," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 111-128, Fall.
- Herbert E. Scarf, 1994. "The Allocation of Resources in the Presence of Indivisibilities," Cowles Foundation Discussion Papers 1068, Cowles Foundation for Research in Economics, Yale University.
- Vogelsang, Ingo, 2001. "Price Regulation for Independent Transmission Companies," Journal of Regulatory Economics, Springer, vol. 20(2), pages 141-165, September.
- Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-242, September.
- Rosellón Juan, 2003. "Different Approaches Towards Electricity Transmission Expansion," Review of Network Economics, De Gruyter, vol. 2(3), pages 1-32, September.
- Crew, Michael A & Fernando, Chitru S & Kleindorfer, Paul R, 1995. "The Theory of Peak-Load Pricing: A Survey," Journal of Regulatory Economics, Springer, vol. 8(3), pages 215-248, November. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2005030. 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: (Alain GILLIS)
If references are entirely missing, you can add them using this form.