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Shadow Pricing of Electric Power Interruptions for Distribution System Operators in Finland

Author

Listed:
  • Sinan Küfeoğlu

    (Energy Policy Research Group, Judge Business School, University of Cambridge, Cambridge CB2 1AG, UK)

  • Niyazi Gündüz

    (Department of Electrical Engineering and Automation, Aalto University, Espoo 02150, Finland)

  • Hao Chen

    (Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing 100081, China)

  • Matti Lehtonen

    (Department of Electrical Engineering and Automation, Aalto University, Espoo 02150, Finland)

Abstract

Increasing distributed generation and intermittencies, along with the increasing frequency of extreme weather events, impose a serious challenge for electric power supply security. Understanding the costs of interruption is vital in terms of enhancing the power system infrastructure and planning the distribution grid. Furthermore, customer rights and demand response techniques are further reasons to study the worth of power reliability. In this paper, the authors make use of directional distance function and shadow pricing methods in a case study of Finland. The aim is to calculate the cost of one minute of power interruption from the perspective of the distribution network operator. The sample consists of 78 distribution network operators from Finland, and uses cost and network information between 2013 and 2015.

Suggested Citation

  • Sinan Küfeoğlu & Niyazi Gündüz & Hao Chen & Matti Lehtonen, 2018. "Shadow Pricing of Electric Power Interruptions for Distribution System Operators in Finland," Energies, MDPI, vol. 11(7), pages 1-14, July.
    • Handle: RePEc:gam:jeners:v:11:y:2018:i:7:p:1831-:d:157668
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    References listed on IDEAS

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    Cited by:

    1. Chen, Hao & Chen, Xi & Niu, Jinye & Xiang, Mengyu & He, Weijun & Küfeoğlu, Sinan, 2021. "Estimating the marginal cost of reducing power outage durations in China: A parametric distance function approach," Energy Policy, Elsevier, vol. 155(C).
    2. Yuan, Peng & Pu, Yuran & Liu, Chang, 2021. "Improving electricity supply reliability in China: Cost and incentive regulation," Energy, Elsevier, vol. 237(C).
    3. Heinrich, Carsten & Ziras, Charalampos & Jensen, Tue V. & Bindner, Henrik W. & Kazempour, Jalal, 2021. "A local flexibility market mechanism with capacity limitation services," Energy Policy, Elsevier, vol. 156(C).
    4. Talat S. Genc & Stephen Kosempel, 2023. "Energy Transition and the Economy: A Review Article," Energies, MDPI, vol. 16(7), pages 1-26, March.

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    More about this item

    Keywords

    power interruption; distribution system operator; interruption cost; shadow price;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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