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Real-time Pricing in Power Markets: Who Gains?

Anette Boom () and Sebastian Schwenen

Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century from Verein für Socialpolitik / German Economic Association

Abstract: We examine welfare effects of real-time pricing in electricity markets. Before stochastic energy demand is known, competitive retailers contract with final consumers who exogenously do not have real-time meters. After demand is realized, two electricity generators compete in a uniform price auction to satisfy demand from retailers acting on behalf of subscribed customers and from consumers with real-time meters. Increasing the number of consumers on real-time pricing does not always increase welfare since risk-averse consumers dislike uncertain and high prices arising through market power. In the Bertrand case, welfare is the same with all or no consumers on smart meters.

JEL-codes: D42 D43 D44 L11 L12 L13 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-com and nep-ene
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Working Paper: Real-time Pricing in Power Markets: Who Gains? (2013) Downloads
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