Modeling long-term dynamics of electricity markets

OLSINA, F.; GARCÉS, F.; HAUBRICH, H.-J.

ENERGY POLICY

Elsevier Science

Lugar: UK; Año: 2006 p. 1 - 23

0301-4215

AbstractIn the last decade, many countries have restructured their electricity industries by introducing competition in their power generation sectors. Although some restructuring has been regarded as successful, the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long-term behavior. Long-term prices and long-termsupply reliability are now center of interest. This concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long-term supply adequacy and the stability of power markets. In order to gain significant insight into the long-term behavior of liberalized power markets, in this paper, a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed. Unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization, the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response. The simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins, and consequently, stable long-term price levels. Because of feedback loops embeddedin the structure of power markets and the existence of some time lags, the long-term market development might exhibit a quite volatile behavior. By varying some exogenous inputs, a sensitivity analysis is carried out to assess the influence of these factors on the long-run market dynamics.COMENTARIO:Es necesario aquí destacar la relevancia de este trabajo a ser próximamente publicado en posiblemente la revista a nivel internacional más importante en el área de economía y política energética (medido según el ISI Journal Citation Report -JCR). Adicionalmente a esto, la importancia y el impacto potencial del trabajo en su área de incumbencia se ve respaldada por la decisión del Editor de Energy Policy de publicar este artículo a pesar de su  extensión.  Energy Policy acepta normalmente artículos (long papers) con una extensión máxima ente 6000 y 8000 palabras Artículos de mayor extensión son sólo aceptados si la importancia y originalidad de sus aportes lo ameritan. El presente artículo tiene una extensión de 14500 palabras, excediendo por un margen considerable la recomendación del Journal y la extensión normal de los artículos publicados en revistas de renombre en el área de sistemas eléctricos de potencia y economía de mercados eléctricos.