A Comparison of Electricity Market Designs in Networks

Authors:
Andreas Ehrenmann;Karsten Neuhoff
Affiliations:
Judge Business School, University of Cambridge, Cambridge, United Kingdom;Faculty of Economics, University of Cambridge, Cambridge, United Kingdom
Venue:
Operations Research
Year:
2009

Citing 6
Cited 1

Iterative solution methods

Iterative solution methods
Mathematical Programs with Complementarity Constraints: Stationarity, Optimality, and Sensitivity

Mathematics of Operations Research
How Stringent Is the Linear Independence Assumption for Mathematical Programs with Complementarity Constraints?

Mathematics of Operations Research
SNOPT: An SQP Algorithm for Large-Scale Constrained Optimization

SIAM Journal on Optimization
Spatial Oligopolistic Electricity Models with Cournot Generators and Regulated Transmission Prices

Operations Research
Manifolds of multi-leader Cournot equilibria

Operations Research Letters

A note on demand functions with uncertainty

Operations Research Letters

Quantified Score

Hi-index	0.00

Visualization

Abstract

In Europe, two market designs are discussed for electricity trade and transmission. We argue that their performance in the presence of market power can be represented by two models from the literature. In contrast to examples for simple two-node networks, we show that in more complex networks a general ranking of both designs is not possible. Hence, computational models are required to evaluate the designs for realistic parameter assumptions. We extend existing formulations of both models to represent them as equilibrium problems with equilibrium constraints (EPEC) with equivalent representation of demand, fringe generation, and strategic generators. In a numerical simulation for the Northwestern European network, the integrated market design performs better. This difference illustrates the impact of small assumptions on the outcome of strategic models.