Article

How many markets for wholesale electricity when supply ispartially flexible?

Claude Crampes et Jérôme Renault

Résumé

The development of non-dispatchable renewable sources of energy requires more flexible reliable thermal equipment to match residual demand. We analyze the advantages of delaying production decisions to benefit from more precise information on states of the world, at the expense of higher production costs in a two-period framework where two technologies with different flexibility characteristics are available. We determine first-best production levels ex ante and ex post, that is, when demand is still random and is known with certainty respectively. We then show that, under perfect competition, first best can be implemented indifferently either by means of ex post state-contingent markets or by means of a day-ahead market followed by adjustment markets. By contrast, when the industry is imperfectly competitive, the two market designs are not equivalent.

Mots-clés

Flexibility; Electricity; Production costs; Day-ahead market; Intraday market; Competition.;

Codes JEL

  • C72: Noncooperative Games
  • D24: Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity
  • L23: Organization of Production
  • L94: Electric Utilities

Remplace

Claude Crampes et Jérôme Renault, « Supply flexibility in electricity markets », TSE Working Paper, n° 18-964, juillet 2018.

Référence

Claude Crampes et Jérôme Renault, « How many markets for wholesale electricity when supply ispartially flexible? », Energy Economics, vol. 81, juin 2019, p. 465–478.

Publié dans

Energy Economics, vol. 81, juin 2019, p. 465–478