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Prediction Markets to Forecast Electricity Demand

Luciano I. de Castro () and Peter Cramton ()

Papers of Peter Cramton from University of Maryland, Department of Economics - Peter Cramton

Abstract: Forecasting electricity demand for future years is an essential step in resource planning. A common approach is for the system operator to predict future demand from the estimates of individual distribution companies. However, the predictions thus obtained may be of poor quality, since the reporting incentives are unclear. We propose a prediction market as a form of forecasting future demand for electricity. We describe how to implement a simple prediction market for continuous variables, using only contracts based on binary variables. We also discuss specific issues concerning the implementation of such a market.

Keywords: electricity market design; prediction markets (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2012, Revised 2012
New Economics Papers: this item is included in nep-ene and nep-for
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Published in Working Paper, University of Maryland, August 2009

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