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Book part
Publication date: 19 March 2018

Kevin Jones

This chapter examines the efficiency of the Midcontinent Independent System Operator (MISO), Inc., electricity exchange following its major expansion in terms of market…

Abstract

This chapter examines the efficiency of the Midcontinent Independent System Operator (MISO), Inc., electricity exchange following its major expansion in terms of market participants and geographic scope in 2014. Specifically, hourly day-ahead (forward) and real-time (spot) prices from 2014 to 2016 reveal that forward premiums are prevalent despite the increase in market size. Furthermore, these forward premiums do not adhere to Bessembinder and Lemmon’s (2002) commonly used general equilibrium model for electricity forward premia. A technical trading rule based on the relationship between day-ahead prices across hubs that was found to be profitable prior to MISO’s expansion still produces economically and statistically significant returns after the exchange’s growth.

Article
Publication date: 5 September 2016

Åsa Grytli Tveten, Jon Gustav Kirkerud and Torjus Folsland Bolkesjø

This study aims to investigate the effects of thermal–hydro interconnection on the revenues, market value and curtailment of variable renewable energy (VRE). The increasing market…

Abstract

Purpose

This study aims to investigate the effects of thermal–hydro interconnection on the revenues, market value and curtailment of variable renewable energy (VRE). The increasing market shares of VRE sources in the Northern European power system cause declining revenues for VRE producers, because of the merit-order effect. A sparsely studied flexibility measure for mitigating the drop in the VRE market value is increased interconnection between thermal- and hydropower-dominated regions.

Design/methodology/approach

A comprehensive partial equilibrium model with a high spatial and temporal resolution is applied for the analysis.

Findings

Model simulation results for 2030 show that thermal–hydro interconnection will cause exchange patterns that to a larger extent follow VRE production patterns, causing significantly reduced VRE curtailment. Wind value factors are found to decrease in the hydropower-dominated regions and increase in thermal power-dominated regions. Because of increased average electricity prices in most regions, the revenues are, however, found to increase for all VRE technologies. By only assuming the planned increases in transmission capacity, total VRE revenues are found to increase by 3.3 per cent and VRE electricity generation increases by 3.7 TWh.

Originality/value

The current study is, to the authors' knowledge, the first to analyze the effect of interconnection between thermal- and hydropower-dominated regions on the VRE market value, and the authors conclude that this is a promising flexibility measure for mitigating the value-drop of VRE caused by the merit-order effect. The study results demonstrate the importance of taking the whole power system into consideration when planning future transmission capacity expansions.

Details

International Journal of Energy Sector Management, vol. 10 no. 3
Type: Research Article
ISSN: 1750-6220

Keywords

Content available
Book part
Publication date: 19 March 2018

Abstract

Details

Global Tensions in Financial Markets
Type: Book
ISBN: 978-1-78714-839-0

Abstract

Details

Modern Energy Market Manipulation
Type: Book
ISBN: 978-1-78743-386-1

Article
Publication date: 5 September 2017

Georg Wolff and Stefan Feuerriegel

Since the liberalization of electricity markets in the European Union, prices are subject to market dynamics. Hence, understanding the short-term drivers of electricity prices is…

Abstract

Purpose

Since the liberalization of electricity markets in the European Union, prices are subject to market dynamics. Hence, understanding the short-term drivers of electricity prices is of major interest to electricity companies and policymakers. Accordingly, this paper aims to study movements of prices in the combined German and Austrian electricity market.

Design/methodology/approach

This paper estimates an autoregressive model with exogenous variables (ARX) in a two-step procedure. In the first step, both time series, which inherently feature seasonality, are de-seasonalized, and in the second step, the influence of all model variables on the two dependent variables, i.e. the day-ahead and intraday European Power Energy Exchange prices, is measured.

Findings

The results reveal that the short-term market is largely driven by seasonality, consumer demand and short-term feed-ins from renewable energy sources. As a contribution to the existing body of literature, this paper specifically compares the price movements in day-ahead and intraday markets. In intraday markets, the influences of renewable energies are much stronger than in day-ahead markets, i.e. by 24.12 per cent for wind and 116.82 per cent for solar infeeds.

Originality/value

Knowledge on the price setting mechanism in the intraday market is particularly scarce. This paper contributes to existing research on this topic by deriving drivers in the intraday market and then contrasting them to the day-ahead market. A more thorough understanding is especially crucial for all stakeholders, who can use this knowledge to optimize their bidding strategies. Furthermore, the findings suggest policy implications for a more stable and efficient electricity market.

Details

International Journal of Energy Sector Management, vol. 11 no. 4
Type: Research Article
ISSN: 1750-6220

Keywords

Book part
Publication date: 1 May 2012

Kevin Jones

Midwest Independent Transmission System Operator, Inc. (MISO) is a nonprofit regional transmission organization (RTO) that oversees electricity production and transmission across…

Abstract

Midwest Independent Transmission System Operator, Inc. (MISO) is a nonprofit regional transmission organization (RTO) that oversees electricity production and transmission across 13 states and 1 Canadian province. MISO also operates an electronic exchange for buying and selling electricity for each of its five regional hubs.

MISO oversees two types of markets. The forward market, which is referred to as the day-ahead (DA) market, allows market participants to place demand bids and supply offers on electricity to be delivered at a specified hour the following day. The equilibrium price, known as the locational marginal price (LMP), is determined by MISO after receiving sale offers and purchase bids from market participants. MISO also coordinates a spot market, which is known as the real-time (RT) market. Traders in the RT market must submit bids and offers by 30minutes prior to the hour for which the trade will be executed. After receiving purchase and sale offers for a given hour in the RT market, MISO then determines the LMP for that particular hour.

The existence of the DA and RT markets allows producers and retailers to hedge against the large fluctuations that are common in electricity prices. Hedge ratios on the MISO exchange are estimated using various techniques. No hedge ratio technique examined consistently outperforms the unhedged portfolio in terms of variance reduction. Consequently, none of the hedge ratio methods in this study meet the general interpretation of FASB guidelines for a highly effective hedge.

Details

Research in Finance
Type: Book
ISBN: 978-1-78052-752-9

Article
Publication date: 25 September 2020

Christof Naumzik and Stefan Feuerriegel

Trading on electricity markets occurs such that the price settlement takes place before delivery, often day-ahead. In practice, these prices are highly volatile as they largely…

Abstract

Purpose

Trading on electricity markets occurs such that the price settlement takes place before delivery, often day-ahead. In practice, these prices are highly volatile as they largely depend upon a range of variables such as electricity demand and the feed-in from renewable energy sources. Hence, the purpose of this paper is to provide accurate forecasts..

Design/methodology/approach

This paper aims at comparing different predictors stemming from supply-side (solar and wind power generation), demand-side, fuel-related and economic influences. For this reason, this paper implements a broad range of non-linear models from machine learning and draw upon the information-fusion-based sensitivity analysis.

Findings

This study disentangles the respective relevance of each predictor. This study shows that external predictors altogether decrease root mean squared errors by up to 21.96%. A Diebold-Mariano test statistically proves that the forecasting accuracy of the proposed machine learning models is superior.

Research limitations/implications

The performance gain from including more predictors might be larger than from a better model. Future research should place attention on expanding the data basis in electricity price forecasting.

Practical implications

When developing pricing models, practitioners can achieve reasonable performance with a simple model (e.g. seasonal-autoregressive moving-average) that is built upon a wide range of predictors.

Originality/value

The benefit of adding further predictors has only recently received traction; however, little is known about how the individual variables contribute to improving forecasts in machine learning.

Details

International Journal of Energy Sector Management, vol. 15 no. 1
Type: Research Article
ISSN: 1750-6220

Keywords

Article
Publication date: 7 April 2023

Pedro Bento, Sílvio Mariano, Pedro Carvalho, Maria do Rosário Calado and José Pombo

This study is a targeted review of some of the major changes in European regulation that guided energy policy decisions in the Iberian Peninsula and how they may have aggravated…

Abstract

Purpose

This study is a targeted review of some of the major changes in European regulation that guided energy policy decisions in the Iberian Peninsula and how they may have aggravated the problem of lack of flexibility. This study aims to assess some of the proposed short-term solutions to address this issue considering the underlying root causes and suggests a different course of action, that in turn, could help alleviate future market strains.

Design/methodology/approach

The evolution of the most important (macro) energy and price-related variables in both Portugal and Spain is assessed using market and grid operator data. In addition, the authors present critical viewpoints on some of the most recent EU and national regulation changes (official document analysis).

Findings

The Iberian energy policy and regulatory agenda has successfully promoted a rapid adoption of renewables (main goal), although with insufficient diversification of generation technologies. The compulsory closings of thermal plants and an increased tax (mainly carbon) added pressure toward more environmentally friendly thermal power plants. However, inevitably, this curbed the bidding price competitiveness of these producers in an already challenging market framework. Moving forward, decisions must be based on “a bigger picture” that does not neglect system flexibility and security of supply and understands the specificities of the Iberian market and its generation portfolio.

Originality/value

This work provides an original account of unprecedented spikes in energy prices in 2021, specifically in the Iberian electricity market. This acute situation worries consumers, industry and governments. Underlining the instability of the market prices, for the first time, this study discusses how some of the most important regulatory changes, and their perception and absorption by involved parties, contributed to the current environment. In addition, this study stresses that if flexibility is overlooked, the overall purpose of having an affordable and reliable system is at risk.

Details

International Journal of Energy Sector Management, vol. 18 no. 2
Type: Research Article
ISSN: 1750-6220

Keywords

Abstract

Details

Modern Energy Market Manipulation
Type: Book
ISBN: 978-1-78743-386-1

Article
Publication date: 28 June 2011

Anurag K. Srivastava, Sukumar Kamalasadan, Daxa Patel, Sandhya Sankar and Khalid S. Al‐Olimat

The electric power industry has been moving from a regulated monopoly structure to a deregulated market structure in many countries. The purpose of this study is to…

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Abstract

Purpose

The electric power industry has been moving from a regulated monopoly structure to a deregulated market structure in many countries. The purpose of this study is to comprehensively review the existing markets to study advantages, issues involved and lessons learnt to benefit emerging electricity markets.

Design/methodology/approach

The paper employs a comprehensive review of existing competitive electricity market models in USA (California), UK, Australia, Nordic Countries (Norway), and developing country (Chile) to analyze the similarities, differences, weaknesses, and strengths among these markets based on publically available data, literature review and information.

Findings

Ongoing or forthcoming electricity sector restructuring activities in some countries can be better designed based on lessons learnt from existing markets and incorporating their own political, technical and economical contexts. A template for design of successful electricity market has also been presented.

Research limitations/implications

This study is limited to a comparative analysis of five markets and can be extended in the future for other existing and emerging electricity markets.

Practical implications

The discussed weaknesses and strengths of existing electricity markets in this study can be practically utilized to improve the electricity industry market structures leading to several social benefits including lower electricity cost.

Originality/value

The comprehensive review and analysis of five existing markets, physically located in different continents, may be used as an assistance or reference guide to benefit the emerging electricity markets in other countries.

Details

International Journal of Energy Sector Management, vol. 5 no. 2
Type: Research Article
ISSN: 1750-6220

Keywords

1 – 10 of 162