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A static deterministic linear peak-load pricing model for the electricity industry: Application to the Peruvian case

Hans Alayo and Raul Garcia Carpio ()

Energy Economics, 2015, vol. 50, issue C, 202-206

Abstract: This article presents a static deterministic linear peak-load pricing model which finds the optimal mix of generation technologies for a given duration curve. The main contribution of the article is the idea of discretizing the duration curve. Since any real duration curve can be approximated by a discretized one, the optimal capacity mix for real world situation can be derived using a linear programming software. Then, for the model with the discretized duration curve, we derive the centralized optimal solution. Also, we show that applying marginal cost pricing allows for the recovery of all generation costs when the mix of technologies is optimal. Finally, we present an application of the proposed model to the Peruvian case; we comment and compare the results with the real capacity mix of the system for the years 2008–2013.

Keywords: Peak-load pricing; Marginal-cost pricing; Electricity industry (search for similar items in EconPapers)
JEL-codes: C61 C63 D41 L11 L51 L94 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.eneco.2015.05.005

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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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