Keywords: Congestion Management, Re-Dispatch System, Welfare Impact, Locational Marginal Pricing; Published in: YEEES seminar 2010; Publication year: 2010; Co-author 1: Hers, J.S.; Co-author 2: Ozdemir, O.; Co-author 3: Kolokathis, C.; Co-author 4: Nieuwenhout, F.; Summary: By the end of 2008, a new policy regarding grid connection in the Netherlands was announced by the Dutch Minister of Economic Affairs. The policy implied renewed access to the grid for new generation capacity in congested regions, while anticipating the establishment of a required new congestion management system by the Minister of Economic Affairs. This study analyses the new connection policy in the Dutch power market and associated models for congestion management under consideration. In the first part of this paper a quantitative analysis of the net benefits of the new connection policy in the Netherlands is presented. Net benefits are calculated as the increase of consumer surplus and producers gross margin minus the cost of congestion. For all the scenarios considered, the benefits are shown to be roughly an order of magnitude higher than the congestion costs. Hence positive net benefits are expected to result from the implementation of the new connection policy. In the second part of this paper, four alternative designs for a congestion management system as laid down by the Dutch Ministry of Economic affairs are evaluated. The assessments were based on simulations using the COMPETES model, assuming a competitive wholesale market, efficient redispatch and both nonstrategic and strategic behaviour regarding congestion management.

Keywords (max 10): electricity market; auction mechanism; social welfare contribution
Published in : Energy Policy
Production / Publication year (yyyy): 2009
Co-author 1 (last name, first name):
Co-author 2 (last name, first name):
Co-author 3 (last name, first name):
Summary / Abstract:An efficient electricity double-sided auction mechanism should control market power and enhance the social welfare of the electricity market. Based on this goal, the paper designs a new double-sided auction mechanism. In the new mechanism, the social welfare contribution of each participant plays a pivotal role, because this contribution is the critical factor in market clearing, payment settling, and transaction matching rules. In particular, each winner of the auction can gain transfer payments according to his contribution to social welfare in the electricity market, and this gives the mechanism the ability to control the market power of some participants. At the same time, this mechanism ensures that the market organizer balances his budget. We then conduct a theoretical and empirical analysis based on the Spanish electricity market. Both of the results show that compared to the uniform-pricing mechanism, the new mechanism can reduce market power of participants and enhance the social welfare of the electricity market.

Keywords (max 10): Large scale wind capacity, grey production, price volatility, wind value implications
Published in (e.g. journal / magazine name, or blank):
Production / Publication year (yyyy): 2008
Co-author 1 (last name, first name): Thijs van den Berg
Co-author 2 (last name, first name):
Co-author 3 (last name, first name):
Summary / Abstract:The ambitioned integration of 10,000 MW Wind energy in the Dutch energy system will not only contribute to meeting the EU 2020 targets, but will also fundamentally alter the power market and underlying merit
order. This will have a serious impact on the utilization of grey production assets and price development on the APX and imbalance market. Furthermore, it is estimated that the amount of “wasted” wind power will increase as more wind capacity is built and the dispatch of grey assets is still driven by economic optimization and technological constraints. Consequently, the value outlook of wind deteriorates dramatically, which puts future investments in wind capacity in a different perspective.

Published in: Energy conversion and Management

Publication year: 2008
Co-Author 1: Pierluigi Mancarella

 

Poly-generation systems for combined production of manifold energy vectors such as electricity, heat at different enthalpy levels (for instance, in the form of hot water and steam), and cooling power from a unique source of primary energy (typically natural gas) are increasingly spreading, above all on a small-scale basis (below 1 MWe), owing to their enhanced energy, environmental and economic characteristics. Availability of suitable tools for assessing the performance of such systems is therefore fundamental. In this paper, a unified general model is proposed for assessing the energy and CO2 emission performance of any type of poly-generation system with natural gas as the energy input. In particular, the classical energy saving model for cogeneration systems is extended to include in the analysis further energy vectors by defining the novel PPES (Poly-generation Primary Energy Saving) indicator. In addition, equivalent efficiencies for CO2 emission assessment are defined and used in the formulation of the new PCO2ER (Poly-generation CO2 Emission Reduction) indicator, specifically introduced for environmental analysis. The formal analogy between the PPES and the PCO2ER indicators is highlighted. Numerical applications are provided to show the effectiveness of the proposed models and to quantify the typical benefits that poly-generation systems can bring. In particular, the new indicators are of relevant interest for both energy planners and policy makers, above all in the outlook of formulating financial incentive strategies, as it already occurs for cogeneration systems, or of participating to specific energy-related markets such as the ones for trading white certificates or emission allowances.

Published in: Computers & Operations Research

Publication year: 2007
Co-Author 1: Domenico Conforti

Co-Author 2: Antonio Violi

The bilateral contract selection and bids definition constitute a strategic issue for electric energy producers that operate in competitive markets, as the liberalized electricity ones. In this paper we propose a two-stage stochastic integer programming model for the integrated optimization of power production and trading which include a specific measure accounting for risk management. We solve the model by means of a novel enumerative solution approach that exploits the particular problem structure. Finally, we report some preliminary computational experiments.

Keywords (max 10): Energy transition, distributed energy, demand management, positioning in the value chain Production / Publication year 2008 Summary / Abstract: Energy transition and subsequent changes in the configuration and dynamics in the energy value chain create challenges and opportunities for energy companies. New product and service portfolio's, a shift in geographical focus or acquisitions down or upstream in the chain, are examples of possible responses. A multidimensional approach is required to capture the oppportunies and mitigate the threats. Energy companies have to find the right balance between enhancement of their vertical postion in the value chain, horizontal expansion in different stages of this chain by for example development of new propositions in supply next to electricity and gas, and finally capturing cross-sectoral opportunities.

Keywords:
Published in:
Publication date: 2001

The Dutch Market  Surveillance Committee (MSC) has been asked by DTe to investigate market transparency in the Dutch electricity market. The Committee has based its investigation upon theoretical as well as practical considerations. The issue has been raised in meetings with representatives from agents in the Dutch electricity market, including market participants and government authorities, some of whom have also provided written input in various forms. In addition, the Committee has considered practices and experience from electricity markets in other countries, including the USA, United Kingdom and the Nordic countries.
The Committee finds, as explained in more detail below, that in the Dutch electricity market transparency is lacking in several important respects. We recommend a series of measures that should be implemented immediately, notably the regular publication of relevant information. In our view these measures are necessary, but not necessarily sufficient, to reach a satisfactory degree of market transparency. We will continually review the issue and, if warranted, propose further measures in the future.

Keywords: Tradable Green Certificates, Financial Risk, Forward Contracts
Published in: 
Publication year: 

This paper analyzes financial risks in a market for Tradable Green Certificates (TGC), both from the perspective of existing renewable producers and potential investors in new renewable electricity generation capacity. The pricing mechanism for a consumer-based TGC market with perfect competition is described. A TGC system with wind turbines as the sole technology is analyzed. In this framework production from wind turbines and TGC prices will be negatively correlated, implying that a distinction between revenue and price fluctuations is important. Finally analytical expressions for revenue-variance-minimizing trading strategies are derived and an analysis of the demand and supply for financial hedging show that forward contracts will be traded at a risk premium.

Keywords: liberalization,
Published in: Global energy business
Publication year: 2002

Because pipelines remain monopolycontrolled, end users are being denied the lower prices that competition was intended to produce. More, higher-liquidity gas hubs could be part of the solution.

Keywords: crude oil
Published in: Energy Economics
Publication year: 1999
Co-author 1: Barbara Ostdiek

We examine the effects of energy derivatives trading on the crude oil market. There is a common public and regulatory perception that derivative securities increase volatility and can have a destabilizing effect on the underlying market. Consistent with this view, we find an abnormal increase in volatility for three consecutive weeks following the introduction of NYMEX crude oil futures. While there is also evidence of a longer-term volatility increase, this is likely due to exogenous factors, such as the continuing deregulation of the energy markets. Subsequent introductions of crude oil options and derivatives on other energy commodities have no effect on crude oil volatility. We also examine the effects of derivatives trading on the depth and liquidity of the crude oil market. This analysis reveals a strong inverse relation between the open interest in crude oil futures and spot market volatility. Specifically, when open interest is greater, the volatility shock associated with a given unexpected increase in volume is much smaller.