Green, Richard, and Iain Staffell. “Richard Green and Iain Staffell - The Contribution of Taxes, Subsidies and Regulations to British Electricity Decarbonisation,” Working Paper.Abstract

    Great Britain’s carbon emissions from electricity generation fell by two-thirds between 2012 and 2019, providing an important example for other nations. This rapid transition was driven by a complex interplay of policies and events: investment in renewable generation, closure of coal power stations, raising carbon prices and energy efficiency measures. Previous studies of the impact of these simultaneous individual measures miss their interactions with each other and with exogenous changes in fuel prices and the weather. Here we use Shapley values, a concept from cooperative game theory, to disentangle these and precisely attribute outcomes (CO2 saved, changes to electricity prices and fossil fuel consumption) to individual drivers. We find the effectiveness of each driver remained stable despite the transformation seen over the 7 years we study. The four main drivers each saved 19–29 MtCO2 per year in 2019, reinforcing the view that there is no ‘silver bullet’, and a multi-faceted approach to deep decarbonisation is essential.

    Anderson, Edward J. “Mixed Strategies in Discriminatory Divisible-good Auctions.” In, 2009.Abstract

    Anderson, Edward J. , Pr Holmberg and Andrew B. Philpott. Mixed Strategies in Discriminatory Divisible-good Auctions. IFN Working Paper No. 814, 2009. 72 pages.

    Using the concept of market-distribution functions, we derive general optimality conditions for discriminatory divisible-good auctions, which are also applicable to Bertrand games and non-linear pricing. We introduce the concept of offer distribution function to analyze randomized offer curves, and characterize mixed-strategy Nash equilibria for pay-as-bid auctions where demand is uncertain and costs are common knowledge; a setting for which pure-strategy supply function equilibria typically do not exist. We generalize previous results on mixtures over horizontal offers as in Bertrand-Edgeworth games, but more importantly we characterize novel mixtures over partly increasing supply functions.



    Evans, Lewis,, and Kevin Counsell. “Options Provided by Storage Can Explain High Electricity Prices.” In, 2006.Abstract

    Generators supplying electricity markets are subject to volatile input and output prices and uncertain fuel availability. Price-risk may be hedged to a considerable extent but fuel-risk — water flows in the case of hydro and gas availability in the case of thermal plants — may not be. We show that a price-taking generator will only generate when the output price exceeds its marginal cost by an amount that reflects the value of the option to delay the use of stored fuel. The corresponding offer price is different from the theorized offer prices of static uniform auctions and more akin to pay-as-bid auction prices. We argue that the option value of delaying fuel use, which is an increasing function of spot price volatility and the uncertainty about fuel availability, must be considered when evaluating whether market power is present in electricity markets. The engineering approach to simulating an electricity supply curve, which has been used in market power evaluations to date, may lead to supply curves that are quite different from those that recognize possible fuel availability limitations, even in the complete absence of market power.

    of Service, New York State Department Public. “Staff Report on the State of Competitive Energy Markets: Progress To Date and Future Opportunities.” In, 2006.Abstract

    The restructuring of the energy industry from regulated vertically-integrated monopolies to competitive markets has been described as "one of the largest single industrial reorganizations in the history of the world." With 9.4 million residential and 1.2 million business electric and natural gas accounts able to choose among a number of energy providers, New York State is recognized as a leader in this area. New York has adopted a flexible approach which has allowed policies to be guided and shaped by the successes and challenges experienced in this and other states, and by continuously evolving market conditions.

    This approach has required an ongoing appraisal of the status of New York's markets and the identification of further steps to be taken to promote the long-range vision adopted by the New York State Public Service Commission (NYPSC or the Commission). As a part of that ongoing effort, this report assesses the current state of New York's wholesale electric markets and retail electric and gas markets, describes progress that has been made over the past several years in creating such markets, and identifies opportunities for continued progress toward robust competition in New York State's energy industry.

    Harvey, Scott, Bruce McConihe, and Susan Pope. “Analysis of the Impact of Coordinated Electricity Markets on Consumer Electricity Charges.” In, 2006.Abstract

    Excerpt from the Executive Summary:

    Over the past several years, a number of groups have questioned whether implementation of coordinated wholesale electricity markets in several regions of the United States has benefited retail electricity customers. The development of these markets was motivated in large part by a desire to achieve increased short-term and long-term efficiency in the generation and delivery of electricity through increased reliance on market mechanisms. Along with this came the expectation of lower retail electricity prices, similar to what occurred in other industries that have undergone a deregulation, such as long-distance telephone service, passenger airlines, and interstate trucking. Spurred by recent increases in electricity prices, some groups have called for a re-examination of the deregulated market structure adopted in coordinated markets in the Midwest, Mid-Atlantic and Northeast (i.e., LMP pricing, day-ahead markets based on security- constrained unit commitment, and financial transmission rights). Some critics have even called for a return to the previous system of rate of return regulation and control area operation by vertically integrated utilities.

    This paper provides an empirical analysis demonstrating that the implementation of coordinated markets has served to reduce the increase in average consumer rates that has resulted from increases in input costs for electricity generation. In addressing this policy question the issue is not whether average consumer rates have risen or declined in recent years, but whether they are lower than they would have been absent implementation of coordinated markets. In fact, average electricity rates have risen over the period since the implementation of coordinated markets, but this increase has occurred in all regions of the country as a result of increasing fuel prices, regardless of market structure.

    Holmberg, Pär. “Asymmetric Supply Function Equilibrium with Constant Marginal Costs.” In, 2005. Publisher's VersionAbstract
    This paper analytically derives a Supply Function Equilibrium (SFE) of a real-time electricity market with multiple firms and asymmetric production capacities. There is a unique SFE, which is piece-wise symmetric when firms have identical constant marginal costs. It is believed that some of the properties of the derived SFE are valid for real-time markets in general. FirmsÕ capacity constraints bind at different prices. Still, firms with non-binding capacity constraints have smooth residual demand. Approximating an asymmetric real-time market with a symmetric one, tends to overestimate mark-ups for small positive imbalances and underestimate mark-ups for large positive imbalances.
    Fabra, Natalia, Nils-Hendrik von der Fehr, and David Harbord. “Designing Electricity Auctions: Uniform, Discriminatory and Vickrey.” In, 2002.Abstract

    Fabra, Natalia, Nils-Hendrik von der Fehr and David Harbord. Designing Electricity Auctions: Uniform, Discriminatory and Vickrey. 9 November 2002. Paper, 37 pages.

    Motivated by the new auction format introduced in the England and Wales electricity market and the recent debate in California, we charac- terize bidding behavior and market outcomes in uniform, discriminatory and Vickrey electricity auctions. The aim is to gain an improved under- standing of how different auction formats affect the degree of competition and overall welfare in decentralized electricity markets. We find that the uniform auction is (weakly) outperformed in consumer surplus terms by the discriminatory auction, but that uniform auctions are (weakly) more efficient. Vickrey auctions guarantee productive efficiency, but at the expense of large payments to firms. The overall welfare ranking of the auctions is thus ambiguous. The paper also clarifies some methodological issues in the analysis of electricity auctions. In particular we show that analogies with continuous share auctions are misplaced so long as firms are restricted to a finite number of bids. We also provide a characterization of multi-unit Vickrey auctions with reserve pricing.



    Schubert, Eric, Sam Zhou, Tony Grasso, and Grace Niu. A Primer on Wholesale Market Design, 2002.Abstract

    This white paper is a primer on wholesale market design and provides background for the open meeting workshop scheduled by the Public Utility Commission of Texas for November 1, 2002. The paper is divided into six sections:

    1. Reasons for this rulemaking;

    2. Measures of an efficient, sustainable market;

    3. Architecture of power markets;

    4. Elements of a power market;

    5. Basic economics of congestion management and day-ahead markets;

    6. Descriptions of wholesale electric markets around the world.