IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v18y2010i4p174-185.html
   My bibliography  Save this article

Production inefficiency of electricity markets with hydro generation

Author

Listed:
  • Philpott, Andy
  • Guan, Ziming
  • Khazaei, Javad
  • Zakeri, Golbon

Abstract

Electricity market designs that decentralize decision making for participants can lead to inefficiencies in the presence of nonconvexity or missing markets. This has been shown in the case of unit-commitment problems that can make a decentralized market equilibrium less efficient than a centrally planned solution. Less attention has been focused on systems with large amounts of hydro-electric generation. We describe the results of an empirical study of the New Zealand wholesale electricity market that attempts to quantify production efficiency losses by comparing market outcomes with a counterfactual central plan.

Suggested Citation

  • Philpott, Andy & Guan, Ziming & Khazaei, Javad & Zakeri, Golbon, 2010. "Production inefficiency of electricity markets with hydro generation," Utilities Policy, Elsevier, vol. 18(4), pages 174-185, December.
    • Handle: RePEc:eee:juipol:v:18:y:2010:i:4:p:174-185
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0957-1787(10)00058-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James Bushnell, 2003. "A Mixed Complementarity Model of Hydrothermal Electricity Competition in the Western United States," Operations Research, INFORMS, vol. 51(1), pages 80-93, February.
    2. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oliver Browne & Stephen Poletti & David Young, 2012. "Simulating market power in the New Zealand electricity market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 46(1), pages 35-50, December.
    2. Tsybina, Eve & Moreno-Cruz, Juan & Tereshin, Alexey, 2019. "Liberalisation lowers primary energy efficiency: Evidence from twin power systems," Energy, Elsevier, vol. 173(C), pages 423-435.
    3. Jean-Michel Glachant, 2014. "Enhancing flexibility and ensuring efficiency and security: Improving the electricity market in Brazil via a virtual reservoir model," EUI-RSCAS Working Papers p0401, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    4. Felipe A. Calabria & J. Tomé Saraiva & Jean-Michel Glachant, 2014. "Enhancing flexibility and ensuring efficiency and security: Improving the electricity market in Brazil via a virtual reservoir model," RSCAS Working Papers 2014/85, European University Institute.
    5. Dominic White & Niven Winchester, 2018. "Energy- and multi-sector modelling of climate change mitigation in New Zealand: current practice and future needs," Working Papers 18_15, Motu Economic and Public Policy Research.
    6. Young, David & Poletti, Stephen & Browne, Oliver, 2014. "Can agent-based models forecast spot prices in electricity markets? Evidence from the New Zealand electricity market," Energy Economics, Elsevier, vol. 45(C), pages 419-434.
    7. Browne, Oliver & Poletti, Stephen & Young, David, 2015. "How does market power affect the impact of large scale wind investment in 'energy only' wholesale electricity markets?," Energy Policy, Elsevier, vol. 87(C), pages 17-27.
    8. Sirin, Selahattin Murat & Camadan, Ercument & Erten, Ibrahim Etem & Zhang, Alex Hongliang, 2023. "Market failure or politics? Understanding the motives behind regulatory actions to address surging electricity prices," Energy Policy, Elsevier, vol. 180(C).
    9. Poletti, Stephen, 2021. "Market Power in the New Zealand electricity wholesale market 2010–2016," Energy Economics, Elsevier, vol. 94(C).
    10. Zeng, Ming & Yang, Yongqi & Fan, Qiannan & Liu, Yingxin & Zou, Zhuojun, 2015. "Coordination between clean energy generation and thermal power generation under the policy of “direct power-purchase for large users” in China," Utilities Policy, Elsevier, vol. 33(C), pages 10-22.
    11. Yang Yang & Minglei Bao & Yi Ding & Yonghua Song & Zhenzhi Lin & Changzheng Shao, 2018. "Review of Information Disclosure in Different Electricity Markets," Energies, MDPI, vol. 11(12), pages 1-20, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Finn R. Førsund, 2015. "Hydropower Economics," International Series in Operations Research and Management Science, Springer, edition 2, number 978-1-4899-7519-5, December.
    2. Kosnik, Lea, 2008. "Consolidation and ownership trends of nonfederal hydropower generating assets, 1980-2003," Energy Economics, Elsevier, vol. 30(3), pages 715-731, May.
    3. Wolf-Peter Schill & Claudia Kemfert, 2011. "Modeling Strategic Electricity Storage: The Case of Pumped Hydro Storage in Germany," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 59-88.
    4. Thomas P. Tangerås & Johannes Mauritzen, 2018. "Real‐time versus day‐ahead market power in a hydro‐based electricity market," Journal of Industrial Economics, Wiley Blackwell, vol. 66(4), pages 904-941, December.
    5. Poletti, Stephen, 2021. "Market Power in the New Zealand electricity wholesale market 2010–2016," Energy Economics, Elsevier, vol. 94(C).
    6. Albert Banal-Estañol & Augusto Rupérez Micola, 2009. "Composition of Electricity Generation Portfolios, Pivotal Dynamics, and Market Prices," Management Science, INFORMS, vol. 55(11), pages 1813-1831, November.
    7. Førsund, Finn R., 2009. "Energy in a Bathtub: Electricity Trade between Countries with Different Generation Technologies," Memorandum 17/2009, Oslo University, Department of Economics.
    8. Heikki Peura & Derek W. Bunn, 2021. "Renewable Power and Electricity Prices: The Impact of Forward Markets," Management Science, INFORMS, vol. 67(8), pages 4772-4788, August.
    9. Finn R. Førsund, 2006. "The Anatomy of Market Power in Electricity Markets with Hydropower as Dominating Technology," ICER Working Papers 21-2006, ICER - International Centre for Economic Research.
    10. Erik Lundin, 2021. "Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 485-536, September.
    11. Pittman, Russell, 2007. "Restructuring the Russian electricity sector: Re-creating California?," Energy Policy, Elsevier, vol. 35(3), pages 1872-1883, March.
    12. Moore, J. & Woo, C.K. & Horii, B. & Price, S. & Olson, A., 2010. "Estimating the option value of a non-firm electricity tariff," Energy, Elsevier, vol. 35(4), pages 1609-1614.
    13. H. Qi & C. K. Woo & K. H. Cao & J. Zarnikau & R. Li, 2024. "Price responsiveness of solar and wind capacity demands," Post-Print hal-04597188, HAL.
    14. Chernyavs’ka, Liliya & Gullì, Francesco, 2007. "Interaction of carbon and electricity prices under imperfect competition," MPRA Paper 5866, University Library of Munich, Germany.
    15. Megy, Camille & Massol, Olivier, 2023. "Is Power-to-Gas always beneficial? The implications of ownership structure," Energy Economics, Elsevier, vol. 128(C).
    16. Newbery, David M. & Greve, Thomas, 2017. "The strategic robustness of oligopoly electricity market models," Energy Economics, Elsevier, vol. 68(C), pages 124-132.
    17. Moritz Bohland & Sebastian Schwenen, 2020. "Technology Policy and Market Structure: Evidence from the Power Sector," Discussion Papers of DIW Berlin 1856, DIW Berlin, German Institute for Economic Research.
    18. Simshauser, Paul, 2024. "On static vs. dynamic line ratings in renewable energy zones," Energy Economics, Elsevier, vol. 129(C).
    19. Fabra, Natalia & Toro, Juan, 2005. "Price wars and collusion in the Spanish electricity market," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 155-181, April.
    20. Mansur, Erin T, 2007. "Upstream Competition and Vertical Integration in Electricity Markets," Journal of Law and Economics, University of Chicago Press, vol. 50(1), pages 125-156, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juipol:v:18:y:2010:i:4:p:174-185. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.sciencedirect.com/journal/utilities-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.