Friday, 15:45 - 16:10 h, Room: MA 549

 

Ozge Ozdemir
Generation capacity investments in electricity markets: Perfect competition

Coauthors: Gul Gurkan, Yves Smeers

 

Abstract:
We focus on perfectly competitive electricity markets with alternative resource adequacy mechanisms: with VOLL pricing, additional capacity market, and operating-reserve pricing.We model each firm's problem as a two-stage problem where generation capacities are installed in the first stage and generation takes place in future spot market at the second stage.When future spot market conditions are not known in advance (i.e., uncertain demand), we have a stochastic equilibrium model. We assess the extent to which these stochastic equilibrium models can be cast into a two-stage stochastic program. In case of all the market mechanisms except operating- reserve pricing, an equilibrium point can be found by solving a two-stage stochastic program.This provides the prevalence of stochastic programming for solving stochastic equilibrium models.For operating-reserve pricing, while the formulation of an equivalent stochastic optimization problem is possible when operating reserves are based on observed demand, this simplicity is lost when operating-reserves are based on installed capacities.We illustrate how all these models can be numerically tackled by using the framework of sample path method.

 

Talk 2 of the invited session Fri.3.MA 549
"Stochastic equilibria in energy markets II" [...]
Cluster 18
"Optimization in energy systems" [...]

 

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