Fundamentals of Power System Economics

Interest in power systems economics is gaining momentum with the recent power supply shortages in America and the rising cost of fossil fuels. The involvement of independent power generators, brokers and distributors has changed the way in which power systems operate. Kirschen and Strbac use a combination of traditional engineering techniques and fundamental economics to address the long-term problems of power system development in a competitive environment. Power system engineers, operators, planners and policy makers working in the deregulated environment will value this practical guide, also of great interest to postgraduate and advanced undergraduate students in electrical and power engineering.

• Outlines the principles of competitive electricity markets alongside the operation and development of the supporting transmission and distribution networks
• Applies basic economic principles to power system operating and planning
• Written by recognised experts in the field

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Preface.

1. Introduction.

1. Why Competition?

2. Dramatis Personae.

3. Models of Competition.

4. Open Questions.

5. Further Reading.

6. Problems.

2. Basic Concepts from Economics.

1. Introduction.

2. Fundamentals of Markets.

3. Concepts from the Theory of the Firm.

4. Types of Markets.

5. Markets with Imperfect Competition.

6. Further Reading.

7. Problems.

3. Markets for Electrical Energy.

1. Introduction.

2. What is the Difference between a Megawatt-hour and a Barrel of Oil?

3. The Need for a Managed Spot Market.

4. Open Electrical Energy Markets.

5. The Managed Spot Market.

6. The Settlement Process.

7. Further Reading.

8. Problems.

4. Participating in Markets for Electrical Energy.

1. Introduction.

2. The Consumer’s Perspective.

3. The Producer’s Perspective.

4. Perspective of Plants with Very Low Marginal Costs.

5. The Hybrid Participant’s Perspective.

6. Further Reading.

7. Problems.

5. System Security and Ancillary Services.

1. Introduction.

2. Describing the needs.

3. Obtaining Ancillary Services.

4. Buying Ancillary Services.

5. Selling Ancillary Services.

6. Further Reading.

7. Problems.

6. Transmission Networks and Electricity Markets.

1. Introduction.

2. Decentralized Trading over a Transmission Network.

3. Centralized Trading over a Transmission Network.

4. Further Reading.

5. Problems.

7. Investing in Generation.

1. Introduction.

2. Generation Capacity from an Investor’s Perspective.

3. Generation Capacity from a Customer’s Perspective.

4. Further Reading.

5. Problems.

8. Investing in Transmission.

1. Introduction.

2. The Nature of the Transmission Business.

3. Cost-based Transmission Expansion.

4. Value-based Transmission Expansion.

5. Further Reading.

6. Problems.

Appendix: Answers to Selected Problems.

Abbreviations and Acronyms.

Index.