Network-constrained models of liberalized electricity markets: the devil is in the details

J. Barquin, M. G. Boots, A. Ehrenmann, Benjamin Hobbs (), Karsten Neuhoff () and F. A. M. Rijkers

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions.

Keywords: Market power; Electricity; Networks; Numeric models; Model comparison (search for similar items in EconPapers)
JEL-codes: C61 C72 D43 L94 (search for similar items in EconPapers)
Pages: 34
Date: 2004-01
New Economics Papers: this item is included in nep-com and nep-mic
Note: CMI32, IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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