Real-time Pricing in Power Markets: Who Gains?

Anette Boom and Sebastian Schwenen ()

No 01-2013, Working Papers from Copenhagen Business School, Department of Economics

Abstract: We examine welfare e ffects of real-time pricing in electricity markets. Before stochastic energy demand is known, competitive retailers contract with final consumers who exogenously do not have real-time meters. After demand is realized, two electricity generators compete in a uniform price auction to satisfy demand from retailers acting on behalf of subscribed customers and from consumers with real-time meters. Increasing the number of consumers on real-time pricing does not always increase welfare since risk-averse consumers dislike uncertain and high prices arising through market power. In the Bertrand case, welfare is the same with all or no consumers on smart meters.

Keywords: Electricity; Real-time Pricing; Market Power; Efficiency. (search for similar items in EconPapers)
JEL-codes: D42 D43 D44 L11 L12 L13 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2013-10-21
New Economics Papers: this item is included in nep-com, nep-ene and nep-reg
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Citations: View citations in EconPapers (1)

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Working Paper: Real-time Pricing in Power Markets: Who Gains? (2012)
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