In the second lecture, we will talk about how to model electricity markets using mathematical programming tools.
In the practical session, we will get familiar with a dataset of electricity market hourly data from California, learn about how to simplify the data using clustering techniques, and set up an economic model of a simple electricity market.
Slides 3: slides3.pdf
Slides 4: slides4.pdf
Practicum 3: practicum3.ipynb, data_jaere_clustered.csv,data_technology.csv, practicum3_slides.pdf
Practicum 4: practicum4.ipynb, data_jaere_clustered.csv,data_technology.csv, practicum4_slides.pdf
Small assignement: Take Practicum 3 code and consider running the market power function for alternative levels of market power (theta). What is the theta that best fits the data? Justify how you define "best fit" in your answer.
❗ Save the Jupyter notebook (.ipynb) and the data CSV file in the same folder. Then, open the Jupyter Notebook to start exploring.
(*) Borenstein, Bushnell, and Wolak (2002). Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market, American Economic Review 92 (5): 1376–1405. https://www.aeaweb.org/articles?id=10.1257/000282802762024557
Bushnell, J. (2011). Building blocks: Investment in renewable and nonrenewable technologies. In Harnessing Renewable Energy in Electric Power Systems: Theory, Practice, Policy: Vol. WP-202R (pp. 159–180). https://doi.org/10.4324/9781936331864
(*) Bushnell, J., Mansur, E., & Saravia, C. (2008). Vertical Arrangments, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets. American Economic Review, 98(1), 237–266. https://doi.org/10.1257/aer.98.1.237
Ito, K., & Reguant, M. (2016). Sequential markets, market power, and arbitrage. American Economic Review, 106(7), 1921–1957. https://doi.org/10.1257/aer.20141529
Kellogg, R., & Reguant, M. (2021). Energy and Environmental Markets, Industrial Organization, and Regulation, in preparation for Handbook of Industrial Organization, working paper
Reguant, M. (2014). Complementary Bidding Mechanisms and Startup Costs in Electricity Markets. Review of Economic Studies, 2014, 81(4): 1708-1742.
Reguant, M. (2019). The Efficiency and Sectoral Distributional Impacts of Large-Scale Renewable Energy Policies. Journal of the Association of Environmental and Resource Economists, 6(S1), S129–S168. https://doi.org/10.1086/701190