Production inefficiency of electricity markets with hydro generation

Andy Philpott, Ziming Guan, Javad Khazaei and Golbon Zakeri

Utilities Policy, 2010, vol. 18, issue 4, 174-185

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.

Keywords: Electricity; market; Hydro-electricity; Stochastic; inflows; Market; power (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:18:y:2010:i:4:p:174-185

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