Contracting for the Second Best in Dysfunctional Electricity Markets
Power pools constitute a set of sometimes complex institutional arrangements for efficiency-enhancing coordination among power systems. Where such institutional arrangements do not exist, there still can be scope for voluntary electricity-sharing a...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/06/19747558/contracting-second-best-dysfunctional-electricity-markets http://hdl.handle.net/10986/19369 |
| Summary: | Power pools constitute a set of
sometimes complex institutional arrangements for
efficiency-enhancing coordination among power systems. Where
such institutional arrangements do not exist, there still
can be scope for voluntary electricity-sharing agreements
among power systems. This paper uses a particular type of
efficient risk-sharing model with limited commitment to
demonstrate that second-best coordination improvements can
be achieved with low to moderate risks of participants
leaving the agreement. In the absence of an impartial market
operator who can observe fluctuations in connected power
systems, establishing quasi-markets for trading excess
electricity through the kind of mechanism described here
helps achieve sustainable cooperation in mutually beneficial
electricity sharing. |
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