Production inefficiency of electricity markets with hydro generation

✍ Scribed by Andy Philpott; Ziming Guan; Javad Khazaei; Golbon Zakeri

• Book ID: 104035553
• Publisher: Elsevier Science
• Year: 2010
• Tongue: English
• Weight: 600 KB
• Volume: 18
• Category: Article
• ISSN: 0957-1787
• DOI: 10.1016/j.jup.2010.09.001

✦ Synopsis

Electricity market designs that decentralize decision making for participants can lead to inefficiencies in the presence of nonconvexity or missing markets. This has been shown in the case of unit-commitment problems that can make a decentralized market equilibrium less efficient than a centrally planned solution. Less attention has been focused on systems with large amounts of hydro-electric generation. We describe the results of an empirical study of the New Zealand wholesale electricity market that attempts to quantify production efficiency losses by comparing market outcomes with a counterfactual central plan.