Economics at your fingertips  

On pricing issues in electricity markets in the presence of externalities

Sarineh Hacopian Dolatabadi, Mohammad Amin Latify, Hamidreza Karshenas and Alimorad Sharifi

Energy, 2022, vol. 246, issue C

Abstract: Economic efficiency is an important goal of all markets including electricity market. Pricing mechanisms can significantly affect the economic efficiency of electricity market. Non-convexities and negative externalities which are resulted from the quasi-fixed cost and operational restrictions of generation units are inherent in electricity markets and affect the economic efficiency of the pricing mechanisms. Although the non-convexities have been studied in the literature, the negative externalities need to be addressed in more details. In this paper, the effects of externalities on the economic efficiency of electricity pricing are studied. Since the pricing in the day-ahead market is an important issue in the electricity market, this mechanism is studied and analyzed as an instance. Due to the inherent non-convexities in the electricity markets, the pricing mechanisms considering non-convexities are evaluated. Two general approaches of pricing in the presence of non-convexities are the uplift-based pricing and the marginal price modification. In this paper, both methods are extended to consider externalities and approach the real market structure, and then numerical studies are conducted on standard test systems.

Keywords: Electricity markets; Externalities; Operational restrictions; Power systems; Pricing (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

More articles in Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2022-07-09
Handle: RePEc:eee:energy:v:246:y:2022:i:c:s0360544222001761