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Derivatives of the nodal prices in market power screening

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  • Pałka, Piotr

Abstract

This paper proposes a novel method for market power screening. This method is developed for horizontally and vertically consolidated power markets, and is based on the optimal power flow (OPF) model properties. It undertakes the calculation and analysis of a matrix of derivatives of the nodal prices with respect to generating unit offer prices. The analysis takes into consideration the influence of particular partakers and energy groups on the nodal prices. This paper presents a theoretical analysis of the partakers' and groups' profits as well as a method for the market power screening. Moreover, the issue wherein the LMP model generates prices above the highest bidding price is discussed. Illustrative case studies and case studies based on the Polish wholesale balancing power market model are also presented.

Suggested Citation

  • Pałka, Piotr, 2017. "Derivatives of the nodal prices in market power screening," Energy Economics, Elsevier, vol. 64(C), pages 149-157.
    • Handle: RePEc:eee:eneeco:v:64:y:2017:i:c:p:149-157
    DOI: 10.1016/j.eneco.2017.03.019
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Optimal power flow; Market power; Wholesale balancing market; Derivative matrix;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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