Short-Run Approach to Electricity Pricing in Continuous Time

Anthony Horsley and Andrew Wrobel

Chapter Chapter 5 in The Short-Run Approach to Long-Run Equilibrium in Competitive Markets, 2016, pp 91-118 from Springer

Abstract: Abstract This applies the model of Chap. 4 to the pricing, operation and investment problems of an Electricity Supply Industry with a technology that can include hydroelectric generation and pumped storage of energy, in addition to thermal generation. The application draws on the authors’ studies of operation and valuation of hydroelectric and pumped-storage plants (which recast Koopmans’s method of shadow pricing of hydroelectric resources). Those results are summarized and “fed into” the short-run approach. Thus the rudimentary one-station model of Chap. 2 is augmented to a continuous-time equilibrium model of electricity pricing with a diverse technology whose plant mix makes supply cross-price dependent, even in the short run (i.e., with the capacities fixed). Demand, too, is allowed to be cross-price dependent.

Keywords: Electricity Price; Shadow Price; Nonnegativity Constraint; Thermal Plant; Thermal Technique (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-319-33398-4_5

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DOI: 10.1007/978-3-319-33398-4_5

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