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Latest Papers:
Combining Energy
Networks, WP-EM-36, with Jan Abrell, available
here
Abstract:
Electricity markets rely on other upstream energy markets like oil,
gas, and coal to provide the necessary fuel for generation. As both
the electricity market and those upstream markets rely on networks,
congestion on one market may lead to changes on another. In this
paper we analyze the interaction of the natural gas network with the
electricity network applying a partial equilibrium approach. The
model is applied to a stylized representation of the European energy
markets. We apply the model to two cases: first the impact of a
supply reduction of natural gas on both markets by cutting imports
from Russia, and second, the impact of the introduction of an
emission restriction on electricity generation. Since natural gas
can be an input for electricity generation, gas price level changes
alter the generation dispatch. However, the network character of
both markets leads to further effects that are not obvious on first
sight. Congestion between markets and particular effects due to loop
flows in electricity markets can lead to price and quantity effects
in markets far away from the initial cause of market changes.
Long-run Cost Functions for
Electricity Transmission , WP-EM-36,
with Juan Rosellón and Ingo Vogelsang, available
here
Abstract:
Electricity transmission has become the pivotal industry segment for
electricity restructuring. Yet, little is known about the shape of
transmission cost functions. Reasons for this can be a lack of
consensus about the definition of transmission output and the
complexitity of the relationship between optimal grid expansion and
output expansion. Knowledge of transmission cost functions could
help firms (Transcos) and regulators plan transmission expansion and
could help design regulatory incentive mechanisms. We explore
transmission cost functions when the transmission output is defined
as point-to-point transactions or financial transmission right (FTR)
obligations and particularly explore expansion under loop-flows. We
test the behavior of FTR-based cost functions for distinct network
topologies and find evidence that cost functions defined as FTR
outputs are piecewise differentiable and that they contain sections
with negative marginal costs. Simulations, however, illustrate that
such unusual properties do not stand in the way of applying
price-cap incentive mechanisms to real-world transmission expansion.
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Upcoming Conferences:
11th IAEE European Conference, Vilnius, 25-28
August, 2010. For more information please click
here.
8th Conference on Applied
Infrastructure Research, Berlin, 8-9 October, 2010. For more information please click
here.
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