Fundamentals of Power System Economics

A new edition of the classic text explaining the fundamentals of competitive electricity markets now updated to reflect the evolution of these markets and the large scale deployment of generation from renewable energy sources

The introduction of competition in the generation and retail of electricity has changed the ways in which power systems function. The design and operation of successful competitive electricity markets requires a sound understanding of both power systems engineering and underlying economic principles of a competitive market. This extensively revised and updated edition of the classic text on power system economics explains the basic economic principles underpinning the design, operation, and planning of modern power systems in a competitive environment. It also discusses the economics of renewable energy sources in electricity markets, the provision of incentives, and the cost of integrating renewables in the grid.

Fundamentals of Power System Economics, Second Edition looks at the fundamental concepts of microeconomics, organization, and operation of electricity markets, market participants strategies, operational reliability and ancillary services, network congestion and related LMP and transmission rights, transmission investment, and generation investment. It also expands the chapter on generation investments discussing capacity mechanisms in more detail and the need for capacity markets aimed at ensuring that enough generation capacity is available when renewable energy sources are not producing due to lack of wind or sun.

• Retains the highly praised first edition s focus and philosophy on the principles of competitive electricity markets and application of basic economics to power system operating and planning

• Includes an expanded chapter on power system operation that addresses the challenges stemming from the integration of renewable energy sources

• Addresses the need for additional flexibility and its provision by conventional generation, demand response, and energy storage

• Discusses the effects of the increased uncertainty on system operation

• Broadens its coverage of transmission investment and generation investment

• Supports self-study with end-of-chapter problems and instructors with solutions manual via companion website

Fundamentals of Power System Economics, Second Edition is essential reading for graduate and undergraduate students, professors, practicing engineers, as well as all others who want to understand how economics and power system engineering interact.

Autorentext

DANIEL S. KIRSCHEN, PHD, is the Donald W. and Ruth Mary Close Professor of Electrical Engineering at the University of Washington, Seattle, USA. GORAN STRBAC, PHD, is a Professor of Energy Systems at Imperial College London, UK. He is also a member of the Steering Committee of the SmartGrids European Technology Platform, co-chair of EU WG on Sustainable Districts and Built Environment of Smart Cities, and Director of the UK Centre for Grid Scale Energy Storage.

Klappentext
A NEW EDITION OF THE CLASSIC TEXT EXPLAINING THE FUNDAMENTALS OF COMPETITIVE ELECTRICITY MARKETSNOW UPDATED TO REFLECT THE EVOLUTION OF THESE MARKETS AND THE LARGE SCALE DEPLOYMENT OF GENERATION FROM RENEWABLE ENERGY SOURCES The introduction of competition in the generation and retail of electricity has changed the ways in which power systems function. The design and operation of successful competitive electricity markets requires a sound understanding of both power systems engineering and underlying economic principles of a competitive market. This extensively revised and updated edition of the classic text on power system economics explains the basic economic principles underpinning the design, operation, and planning of modern power systems in a competitive environment. It also discusses the economics of renewable energy sources in electricity markets, the provision of incentives, and the cost of integrating renewables in the grid. Fundamentals of Power System Economics, Second Edition looks at the fundamental concepts of microeconomics, organization, and operation of electricity markets, market participants' strategies, operational reliability and ancillary services, network congestion and related LMP and transmission rights, transmission investment, and generation investment. It also expands the chapter on generation investmentsdiscussing capacity mechanisms in more detail and the need for capacity markets aimed at ensuring that enough generation capacity is available when renewable energy sources are not producing due to lack of wind or sun.

• Retains the highly praised first edition's focus and philosophy on the principles of competitive electricity markets and application of basic economics to power system operating and planning
• Includes an expanded chapter on power system operation that addresses the challenges stemming from the integration of renewable energy sources
• Addresses the need for additional flexibility and its provision by conventional generation, demand response, and energy storage
• Discusses the effects of the increased uncertainty on system operation
• Broadens its coverage of transmission investment and generation investment
• Updates end-of-chapter problems and accompanying solutions manual Fundamentals of Power System Economics, Second Edition is essential reading for graduate and undergraduate students, professors, practicing engineers, as well as all others who want to understand how economics and power system engineering interact.

Inhalt
Preface to the First Edition xiii

Preface to the Second Edition xv

1 Introduction 1

1.1 Why Competition? 1

1.2 Market Structures and Participants 2

1.2.1 Traditional Model 2

1.2.2 Introducing Independent Power Producers 4

1.2.3 Wholesale Competition 5

1.2.4 Retail Competition 6

1.2.5 Renewable and Distributed Energy Resources 6

1.3 Dramatis Personae 7

1.4 Competition and Privatization 8

1.5 Experience and Open Questions 9

1.6 Problems 10

Further Reading 11

2 Basic Concepts from Economics 13

2.1 Introduction 13

2.2 Fundamentals of Markets 13

2.2.1 Modeling the Consumers 13

2.2.1.1 Individual Demand 13

2.2.1.2 Surplus 14

2.2.1.3 Demand and Inverse Demand Functions 15

2.2.1.4 Elasticity of Demand 18

2.2.2 Modeling the Producers 18

2.2.2.1 Opportunity Cost 18

2.2.2.2 Supply and Inverse Supply Functions 19

2.2.2.3 Producers' Revenue 20

2.2.2.4 Elasticity of Supply 20

2.2.3 Market Equilibrium 22

2.2.4 Pareto Efficiency 24

2.2.5 Global Welfare and Deadweight Loss 25

2.2.6 Time-varying Prices 26

2.3 Concepts from the Theory of the Firm 27

2.3.1 Inputs and Outputs 27

2.3.2 Long Run and Short Run 27

2.3.3 Costs 30

2.3.3.1 Short-run Costs 30

2.3.3.2 Long-run Costs 32

2.4 Risk 34

2.5 Types of Markets 34

2.5.1 Spot Market 35

2.5.2 Forward Contracts and Forward Markets 35

2.5.3 Futures Contracts and Futures Markets 37

2.5.4 Options 38

2.5.5 Contracts for Difference 39

2.5.6 Managing the Price Risks 40

2.5.7 Market Efficiency 41

2.6 Markets with Imperfect Competition 41

2.6.1 Market Power 41

2.6.2 Monopoly 42

2.7 Problems 43

Further Reading 49

3 Markets for Electrical Energy 51

3.1 What Is the Difference Between a Megawatt-hour and a Barrel of Oil? 51

3.2 Trading Periods 52

3.3 Forward Markets 53

3.3.1 Bilateral or Decentralized Trading 54

3.3.2 Centralized Trading 57

3.3.2.1 Principles of Centralized Trading 57

3.3.2.2 Day-ahead Centralized Trading 59

3.3.2.3 Formulation as an Optimization Problem 60

3.3.2.4 Market Clearing Price 61

3.3.2.5 Recovering the Fixed Costs 63

3.3.3 Comparison of Centralized and Decentralized Trading 67

3.4 Spot Markets 68

3.4.1 Obtaining Balancing…