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Market Design for Trading Commoditized Renewable Energy

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  • Heshmati, Almas

    () (Centre of Excellence for Science and Innovation Studies (CESIS), and Jönköping University (JIBS))

  • Abolhosseini, Shahrouz

    () (College of Engineering, TEMEP, Seoul National University, Seoul, Korea)

Abstract

Information and communication technology plays an important role in achieving a higher level of energy efficiency. In particular, energy efficiency can be achieved by integrating information technology into electricity networks to enable the interaction between suppliers and customers (smart grids). Power generation by renewable energy sources can also benefit from this integration of technologies. Distributed power generation, which will be the basis of renewable energy production, encourages the production of renewable energy resources and, accordingly, decreases transmission loss, increases energy saving, and enhances energy efficiency. Therefore, integrating distributed, renewable energy sources and smart grids within local marketplaces for trading renewable energy in small units can be a promising combination. In this paper, we propose a structure of a marketplace for renewable energy sources, design a market mechanism for trading in this market, and outline the requirements for such a market to function efficiently. Finally, we conclude and present recommendations to policymakers to provide incentives to generators to increase deployment of renewable energy sources and to end users to save electricity and to consume clean energy.

Suggested Citation

  • Heshmati, Almas & Abolhosseini, Shahrouz, 2014. "Market Design for Trading Commoditized Renewable Energy," Working Paper Series in Economics and Institutions of Innovation 372, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0372
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    References listed on IDEAS

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    Cited by:

    1. Almas Heshmati & Shahrouz Abolhosseini, 2016. "European energy security Challenges and green opportunities," WIDER Working Paper Series 021, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Market design; market mechanism; trading energy; renewable energy; clean energy; energy policy;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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