Electricity Markets Investment, Performance and Analysis

by Murray, Barrie

• ISBN13: 9780471985075
• ISBN10: 0471985074
• Edition: 1st
• Format: Hardcover
• Copyright: 1998-12-29
• Publisher: Wiley

Summary

This timely book will enlighten a broad audience ranging from utility managers and suppliers involved in deregulation to consultants and academics concerned with managing change.

Author Biography

Barrie Murray is the author of Electricity Markets: Investment, Performance and Analysis, published by Wiley.

Table of Contents

PREFACE	xv	(2)
SYMBOLS	xvii
PART ONE A REVIEW OF MARKET STRUCTURES AND MECHANISMS	1	(98)
Chapter 1 Introduction	3	(8)
OBJECTIVES	3	(1)
INTERNATIONAL PERSPECTIVES	4	(3)
COMMERCIAL ARRANGEMENTS	7	(1)
IMPLICATIONS	8	(1)
THE ANALYSIS	9	(2)
Chapter 2 Alternative Market Structures	11	(10)
THE GROSS POOL	11	(2)
BILATERAL TRADING -- THE NET POOL	13	(1)
THE SINGLE BUYER	14	(1)
ZONAL POOLS	15	(1)
MIXED GENERATION	16	(1)
STATE UTILITY	16	(1)
TRANSMISSION ISSUES	17	(1)
SUPPLY ISSUES	18	(1)
STRANDED ASSETS	18	(1)
MARKET COMPARISONS	19	(2)
Chapter 3 Market Mechanisms	21	(12)
PRICE SETTING	21	(1)
SECURING AVAILABILITY	22	(1)
ACCOMMODATING TRANSMISSION CONSTRAINTS	23	(1)
ENABLING DEMAND SIDE PARTICIPATION	24	(1)
CAPTURING DATA FOR SETTLEMENT	25	(1)
CALCULATING PAYMENTS	25	(4)
UNIT COMMITMENT	29	(1)
CONCLUSION	30	(3)
Chapter 4 Markets in Operation	33	(14)
RELIABILITY	33	(2)
COMPETITION	35	(3)
PRICE TRENDS	38	(1)
SMP v DEMAND	39	(1)
INVESTMENT	40	(3)
EFFICIENCY IN OPERATION	43	(1)
CONCLUSIONS	44	(3)
Chapter 5 Market Modelling	47	(10)
SOLUTION PROCESS	47	(4)
PRODUCTION MODELLING	51	(4)
CONCLUSIONS	55	(2)
Chapter 6 SMP Theory and Optimal Plant Mix	57	(8)
SMP DERIVATION	57	(1)
DERIVATION OF OPTIMAL PLANT MIX	58	(3)
SMP ESTIMATION	61	(1)
CONCLUSIONS	62	(3)
Chapter 7 LOLP Theory and Optimal Margin	65	(8)
THEORY	65	(1)
LOLP v MARGIN	66	(2)
COMPARISON OF THEORY WITH MODEL AND ACTUAL	68	(1)
LOLP AND POOLING	68	(2)
OPTIMUM INVESTMENT LEVEL	70	(1)
CONCLUSION	71	(2)
Chapter 8 Idealised Tariffs	73	(10)
BASIC PRINCIPLE	73	(1)
IDEAL PRICE DERIVATION	74	(1)
ACTUAL SMP PRICES	75	(1)
LOLP AND CAPACITY CHARGE	76	(2)
BST	78	(1)
COMPARISON OF ACTUAL PSP WITH BST	79	(1)
THE OPEN SUPPLY MARKET	80	(1)
CONCLUSIONS	81	(2)
Chapter 9 Review of Market Shortcomings	83	(6)
MARGINAL PRICING	83	(1)
PLANT MIX	84	(1)
PLANT MARGINS	85	(1)
TRANSMISSION MANAGEMENT	86	(1)
CONSUMERS	86	(1)
SECURITY OF SUPPLY	87	(1)
CONCLUSIONS	88	(1)
Chapter 10 A Medium-term Market based on Lagrangian Relaxation	89	(10)
THE REQUIREMENTS	90	(1)
THE PROCESS	91	(1)
THE THEORY	91	(3)
COMMERCIAL ARRANGEMENTS	94	(1)
OTHER IMPROVEMENTS	95	(1)
BENEFITS	96	(1)
CONCLUSION	96	(3)
PART TWO GENERATION INVESTMENT APPRAISAL	99	(44)
Chapter 11 Basic Principles	101	(6)
CLASSICAL APPROACH	101	(1)
PRE-PRIVATISATION APPROACH	102	(1)
POST-PRIVATISATION APPROACH	103	(2)
SHORTCOMINGS	105	(1)
CONCLUSION	105	(2)
Chapter 12 Predicting SMP and Income	107	(14)
ESTIMATION OF INCOME	107	(1)
BIDDING STRATEGY	108	(1)
GENERATOR COSTS	108	(1)
PROFIT FORECAST	109	(1)
PREDICTING UTILISATION	110	(3)
PREDICTING SMP	113	(1)
RESULTS	114	(1)
FORWARD PRICING	115	(4)
CONCLUSIONS	119	(2)
Chapter 13 Market Share and Appraisal Process	121	(12)
THE PROFIT FUNCTION	121	(1)
CALCULATING TOTAL PROFIT	122	(3)
OVERVIEW OF PROCESS	125	(1)
MODELLING UNCERTAINTY	126	(2)
ALTERNATIVE COMPANY INTERACTION MODELS	128	(2)
COMPARISON WITH ACTUAL	130	(1)
CONCLUSIONS	130	(3)
Chapter 14 Predicting Multiple Company Interaction	133	(10)
THE SYSTEM MERIT ORDER	133	(1)
THEORETICAL DERIVATION OF PROFIT FUNCTION	134	(1)
RESULTS	135	(1)
CHANGING CAPACITY AND DEMAND	135	(1)
MULTIPLE INTERACTION	136	(2)
MODELLING INTERACTIVE EXPANSION	138	(1)
RISK AND OPTION EVALUATION	139	(1)
CONCLUSIONS	140	(3)
PART THREE TRANSMISSION INVESTMENT APPRAISAL	143	(50)
Chapter 15 Review of International Structures	145	(8)
THE REGULATED MONOPOLY	145	(1)
OBJECTIVES OF A MARKET STRUCTURE	146	(1)
INTERNATIONAL PRACTICE	146	(5)
DISCUSSION	151	(2)
Chapter 16 Cost Apportionment and Benefit	153	(10)
COST APPORTIONMENT OF EXISTING SYSTEM	155	(1)
THE BENEFIT FUNCTION	155	(2)
ASSESSMENT OF GLOBAL BENEFIT	157	(3)
NEW INVESTMENT TYPES	160	(1)
CONCLUSIONS	161	(2)
Chapter 17 Interconnection Evaluation	163	(10)
INCOME AND COSTS	164	(1)
EFFECT OF INTERCONNECTION	164	(1)
THE OPTIMAL WHEEL	165	(1)
EXAMPLE	166	(2)
TRANSMISSION PROFIT	168	(1)
SYSTEM WHEELING	169	(1)
CONSUMER REACTION	170	(1)
DISCUSSION	171	(2)
Chapter 18 Managing Constraints	173	(10)
CONSTRAINT COSTS	174	(1)
POST-MARKET SETTLEMENT -- UPLIFT DEFINITION	175	(1)
COMMERCIAL ARRANGEMENTS	176	(1)
TRANSACTION MODEL	177	(1)
THEORETICAL FORMULATION	178	(2)
MODELLING IN OPERATION	180	(2)
CONCLUSION	182	(1)
Chapter 19 Optimal Investment and Outage Planning	183	(10)
MODELLING	184	(1)
LOADING PROGRAMME	184	(1)
THE COST FUNCTION	185	(1)
DERIVATION OF OPTIMAL OUTAGE PATTERN	186	(1)
EXAMPLE	187	(1)
FULL-YEAR ASSESSMENT	188	(1)
INVESTMENT EVALUATION	189	(1)
COMMERCIAL ARRANGEMENTS	190	(1)
CONCLUSION	191	(2)
PART FOUR THE IMPACT ON UTILITY OPERATIONS	193	(28)
Chapter 20 Impact on System Operation	195	(8)
KEEPING THE LIGHTS ON	196	(3)
FACILITATING THE MARKET	199	(2)
THE INDEPENDENT SYSTEM OPERATOR	201	(1)
CONCLUSIONS	202	(1)
Chapter 21 Impact on System Development	203	(6)
GENERATION PLANNING	203	(2)
TRANSMISSION	205	(2)
DISTRIBUTION PLANNING	207	(1)
CONCLUSIONS	208	(1)
Chapter 22 The Commercial Infrastructure	209	(6)
GENERATION	210	(1)
TRANSMISSION	211	(1)
DISTRIBUTION	212	(1)
SUPPLIER INCOME	212	(1)
LICENCED/UNLICENCED	213	(1)
CULTURE	213	(1)
TAKE-OVERS AND MERGERS	213	(1)
CONCLUSION	214	(1)
Chapter 23 The IT/Communications Infrastructure	215	(6)
BACKGROUND	215	(1)
NEW REQUIREMENTS	216	(1)
DESIGN CONSIDERATIONS	217	(1)
STRUCTURE	217	(2)
STATION LINKS	219	(1)
CONCLUSIONS	219	(2)
PART FIVE THE CHANGING MARKET FOR FACILITY PROVIDERS	221	(26)
Chapter 24 New Businesses and Drivers	223	(6)
NEW INTERFACES AND DRIVERS	224	(1)
NEW NEEDS	224	(1)
SUPPLIER RESPONSE	225	(1)
FUTURE	226	(3)
Chapter 25 Primary Plant for Generation, Transmission and Distribution	229	(10)
ACTUAL DEVELOPMENTS	230	(3)
PROJECTED MARKET NEEDS	233	(4)
CONCLUSIONS	237	(2)
Chapter 26 IT Metering and Telecommunications	239	(8)
METERING SYSTEMS	240	(2)
COMMERCIAL DATA HANDLING SYSTEMS	242	(1)
SETTLEMENT SYSTEMS	242	(1)
ASSET MANAGEMENT SYSTEMS	243	(1)
OPERATIONAL SYSTEMS	244	(1)
CONCLUSIONS	245	(2)
PART SIX THE MARKET AND THE FUTURE	247	(20)
Chapter 27 The Role and Effect of Regulation	249	(6)
INTERNATIONAL PRACTICE	250	(1)
EXPERIENCE	251	(1)
IMPACT ON GENERATION AND TRANSMISSION	252	(1)
THE NUCLEAR POSITION	252	(1)
GAS ELECTRICITY ARBITRAGE	253	(1)
IMPACT ON INVESTMENT	254	(1)
Chapter 28 Conclusions	255	(6)
THE MARKET	255	(1)
GENERATION INVESTMENT APPRAISAL	256	(2)
TRANSMISSION INVESTMENT APPRAISAL	258	(1)
THE IMPACT ON UTILITY OPERATIONS	259	(1)
THE CHANGING MARKET FOR FACILITY PROVIDERS	260	(1)
Chapter 29 The Future	261	(6)
ARE MARKETS DELIVERING BENEFIT?	261	(1)
THE ECONOMIC THEORY	262	(1)
ALTERNATIVE STRUCTURES	263	(1)
ALTERNATIVE WORKING ARRANGEMENTS	264	(1)
THE WAY FORWARD	265	(1)
FURTHER DEVELOPMENTS	266	(1)
CONCLUSION	266	(1)
SELECT BIBLIOGRAPHY	267	(4)
GLOSSARY	271	(2)
INDEX	273