Energy prices in the presence of plant indivisibilities

Fischer, R; Serra P.

Abstract

In several countries (Chile, Bolivia, Argentina and Peru, among others), power plants are dispatched according to merit order, i.e. based on the marginal operating costs of the plants. In this scheme, the operating plant with the highest marginal cost sets the spot price at which firms trade the energy required to fulfill their contracts. The underlying peak-load pricing model assumes that plants can operate at any level up to capacity, whereas real power plants have minimum operating levels. This implies that a low cost plant might have to reduce its supply in order to accommodate the minimum operating level of a more expensive power plant. This paper derives the welfare maximizing price rules in this case and shows that the standard peak-load pricing rules no longer apply. © 2002 Elsevier Science B.V. All rights reserved.

Más información

Título según WOS: Energy prices in the presence of plant indivisibilities
Título según SCOPUS: Energy prices in the presence of plant indivisibilities
Título de la Revista: ENERGY ECONOMICS
Volumen: 25
Número: 4
Editorial: ELSEVIER SCIENCE BV
Fecha de publicación: 2003
Página de inicio: 303
Página final: 314
Idioma: English
URL: http://linkinghub.elsevier.com/retrieve/pii/S014098830200107X
DOI:

10.1016/S0140-9883(02)00107-X

Notas: ISI, SCOPUS