Network-constrained models of liberalized electricity markets: the devil is in the details
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Authors
Barquin, J.
Boots, M. G.
Ehrenmann, A.
Hobbs, Benjamin F.
Neuhoff, Karsten
Rijkers, F. A. M.
Publication Date
2004-06-16Series
Cambridge Working Papers in Economics
Publisher
Faculty of Economics
Language
en_GB
Type
Working Paper
Metadata
Show full item recordCitation
Barquin, J., Boots, M. G., Ehrenmann, A., Hobbs, B. F., Neuhoff, K., & Rijkers, F. A. M. (2004). Network-constrained models of liberalized electricity markets: the devil is in the details. https://doi.org/10.17863/CAM.5020
Abstract
Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions.
Keywords
Classification-JEL: D43, C72, L94, C61, Market power, Electricity, Networks, Numeric models, Model comparison
Identifiers
This record's DOI: https://doi.org/10.17863/CAM.5020
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