Energy Price Decoupling and the Split Market Issue

Thomas Weyman-Jones ()
Additional contact information
Thomas Weyman-Jones: Loughborough Business School, Loughborough University, Leicestershire LE11 3TU, UK

Energies, 2023, vol. 16, issue 16, 1-17

Abstract: Load scheduling and dispatch by merit order on electricity generation networks has used a wholesale market electricity system operator model focused on system marginal pricing, in which the spot price of electricity at any point in time is equal to the system marginal cost given by the higher value of the price, which rations demand to capacity or the operating cost of the most expensive plant on the system, which is usually a fossil fuel price. This idea has come under challenge because renewable technologies such as wind power farms or solar power farms are treated as having close to zero operating costs. The challenges, under the general heading of energy price decoupling, include suggestions for operating split markets possibly overseen by a regulator, and the prediction that marginal cost pricing should be abandoned. This review evaluates these in terms of their economic impact, relating them to the policy debates on electricity market reform.

Keywords: electricity markets; marginal cost pricing; split markets (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1996-1073/16/16/5910/pdf (application/pdf)
https://www.mdpi.com/1996-1073/16/16/5910/ (text/html)

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: https://EconPapers.repec.org/RePEc:gam:jeners:v:16:y:2023:i:16:p:5910-:d:1214158

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().