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...

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Main Authors:	Nikandrova, Arina, Steinbuks, Jevgenijs
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ADVERSE SELECTION AGGREGATE SUPPLY APPROACH ASYMMETRIC INFORMATION AVAILABILITY BALANCE BARTER COAL CONSUMPTION OF ELECTRICITY CONTRACT ENFORCEMENT CONTRACTUAL AGREEMENTS DEMAND FOR ELECTRICITY DEREGULATION DISCOUNT RATE ECONOMIC BEHAVIOR ECONOMIC BENEFITS ECONOMIC DEVELOPMENT ECONOMIES OF SCALE EFFICIENT ALLOCATION EFFICIENT ALLOCATIONS ELECTRIC GRID ELECTRIC POWER ELECTRIC POWER GENERATION ELECTRIC POWER SYSTEMS ELECTRIC SYSTEM ELECTRIC SYSTEMS ELECTRICITY ELECTRICITY CONSUMPTION ELECTRICITY EXCHANGE ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY MARKET ELECTRICITY PRODUCTION ELECTRICITY SECTOR ELECTRICITY SUPPLY ELECTRICITY SYSTEMS ELECTRICITY TRADE ELECTRIFICATION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY REGULATORY COMMISSION ENERGY SECTOR ENERGY TRANSMISSION EXCESS ELECTRICITY FIRST ORDER CONDITION FIXED COSTS FOSSIL FOSSIL FUEL GENERATION GENERATION ASSETS GENERATION CAPACITY GENERATION OF ELECTRICITY GENERATORS GRIDS INFRASTRUCTURE SERVICES MARGINAL COSTS MARKET DISTORTIONS MICROECONOMICS NUCLEAR POWER NUCLEAR POWER PLANTS OPEN ACCESS PEAK DEMAND PEAK DEMAND PERIODS POLITICAL ECONOMY POSITIVE PRODUCTION POWER POWER FLOWS POWER MARKETS POWER PLANT POWER PLANTS POWER POOLS POWER SECTOR POWER SECTOR REFORM POWER SHORTAGES POWER SUPPLIES POWER SUPPLY POWER SYSTEM POWER SYSTEMS PRESENT VALUE PRICE ADJUSTMENTS PRODUCTION OF ELECTRICITY PRODUCTIVITY PUBLIC SECTOR RENEWABLE GENERATION RETAIL ELECTRICITY RISK SHARING SOCIAL SURPLUS SUNK COSTS SUPPLY OF ELECTRICITY TRANSMISSION CAPACITY TRANSMISSION CONSTRAINTS TRANSMISSION GRID TRANSMISSION LINES TRANSMISSION ORGANIZATION TRANSMISSION SYSTEM UTILITIES WIND
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19747558/contracting-second-best-dysfunctional-electricity-markets http://hdl.handle.net/10986/19369

id	okr-10986-19369
recordtype	oai_dc
spelling	okr-10986-193692021-04-23T14:03:51Z Contracting for the Second Best in Dysfunctional Electricity Markets Nikandrova, Arina Steinbuks, Jevgenijs ADVERSE SELECTION AGGREGATE SUPPLY APPROACH ASYMMETRIC INFORMATION AVAILABILITY BALANCE BARTER COAL CONSUMPTION OF ELECTRICITY CONTRACT ENFORCEMENT CONTRACTUAL AGREEMENTS DEMAND FOR ELECTRICITY DEREGULATION DISCOUNT RATE ECONOMIC BEHAVIOR ECONOMIC BENEFITS ECONOMIC DEVELOPMENT ECONOMIES OF SCALE EFFICIENT ALLOCATION EFFICIENT ALLOCATIONS ELECTRIC GRID ELECTRIC POWER ELECTRIC POWER GENERATION ELECTRIC POWER SYSTEMS ELECTRIC SYSTEM ELECTRIC SYSTEMS ELECTRICITY ELECTRICITY CONSUMPTION ELECTRICITY EXCHANGE ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY MARKET ELECTRICITY PRODUCTION ELECTRICITY SECTOR ELECTRICITY SUPPLY ELECTRICITY SYSTEMS ELECTRICITY TRADE ELECTRIFICATION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY REGULATORY COMMISSION ENERGY SECTOR ENERGY TRANSMISSION EXCESS ELECTRICITY FIRST ORDER CONDITION FIXED COSTS FOSSIL FOSSIL FUEL GENERATION GENERATION ASSETS GENERATION CAPACITY GENERATION OF ELECTRICITY GENERATORS GRIDS INFRASTRUCTURE SERVICES MARGINAL COSTS MARKET DISTORTIONS MICROECONOMICS NUCLEAR POWER NUCLEAR POWER PLANTS OPEN ACCESS PEAK DEMAND PEAK DEMAND PERIODS POLITICAL ECONOMY POSITIVE PRODUCTION POWER POWER FLOWS POWER MARKETS POWER PLANT POWER PLANTS POWER POOLS POWER SECTOR POWER SECTOR REFORM POWER SHORTAGES POWER SUPPLIES POWER SUPPLY POWER SYSTEM POWER SYSTEMS PRESENT VALUE PRICE ADJUSTMENTS PRODUCTION OF ELECTRICITY PRODUCTIVITY PUBLIC SECTOR RENEWABLE GENERATION RETAIL ELECTRICITY RISK SHARING SOCIAL SURPLUS SUNK COSTS SUPPLY OF ELECTRICITY TRANSMISSION CAPACITY TRANSMISSION CONSTRAINTS TRANSMISSION GRID TRANSMISSION LINES TRANSMISSION ORGANIZATION TRANSMISSION SYSTEM UTILITIES WIND 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. 2014-08-15T17:08:42Z 2014-08-15T17:08:42Z 2014-06 http://documents.worldbank.org/curated/en/2014/06/19747558/contracting-second-best-dysfunctional-electricity-markets http://hdl.handle.net/10986/19369 English en_US Policy Research Working Paper;No. 6955 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADVERSE SELECTION AGGREGATE SUPPLY APPROACH ASYMMETRIC INFORMATION AVAILABILITY BALANCE BARTER COAL CONSUMPTION OF ELECTRICITY CONTRACT ENFORCEMENT CONTRACTUAL AGREEMENTS DEMAND FOR ELECTRICITY DEREGULATION DISCOUNT RATE ECONOMIC BEHAVIOR ECONOMIC BENEFITS ECONOMIC DEVELOPMENT ECONOMIES OF SCALE EFFICIENT ALLOCATION EFFICIENT ALLOCATIONS ELECTRIC GRID ELECTRIC POWER ELECTRIC POWER GENERATION ELECTRIC POWER SYSTEMS ELECTRIC SYSTEM ELECTRIC SYSTEMS ELECTRICITY ELECTRICITY CONSUMPTION ELECTRICITY EXCHANGE ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY MARKET ELECTRICITY PRODUCTION ELECTRICITY SECTOR ELECTRICITY SUPPLY ELECTRICITY SYSTEMS ELECTRICITY TRADE ELECTRIFICATION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY REGULATORY COMMISSION ENERGY SECTOR ENERGY TRANSMISSION EXCESS ELECTRICITY FIRST ORDER CONDITION FIXED COSTS FOSSIL FOSSIL FUEL GENERATION GENERATION ASSETS GENERATION CAPACITY GENERATION OF ELECTRICITY GENERATORS GRIDS INFRASTRUCTURE SERVICES MARGINAL COSTS MARKET DISTORTIONS MICROECONOMICS NUCLEAR POWER NUCLEAR POWER PLANTS OPEN ACCESS PEAK DEMAND PEAK DEMAND PERIODS POLITICAL ECONOMY POSITIVE PRODUCTION POWER POWER FLOWS POWER MARKETS POWER PLANT POWER PLANTS POWER POOLS POWER SECTOR POWER SECTOR REFORM POWER SHORTAGES POWER SUPPLIES POWER SUPPLY POWER SYSTEM POWER SYSTEMS PRESENT VALUE PRICE ADJUSTMENTS PRODUCTION OF ELECTRICITY PRODUCTIVITY PUBLIC SECTOR RENEWABLE GENERATION RETAIL ELECTRICITY RISK SHARING SOCIAL SURPLUS SUNK COSTS SUPPLY OF ELECTRICITY TRANSMISSION CAPACITY TRANSMISSION CONSTRAINTS TRANSMISSION GRID TRANSMISSION LINES TRANSMISSION ORGANIZATION TRANSMISSION SYSTEM UTILITIES WIND
spellingShingle	ADVERSE SELECTION AGGREGATE SUPPLY APPROACH ASYMMETRIC INFORMATION AVAILABILITY BALANCE BARTER COAL CONSUMPTION OF ELECTRICITY CONTRACT ENFORCEMENT CONTRACTUAL AGREEMENTS DEMAND FOR ELECTRICITY DEREGULATION DISCOUNT RATE ECONOMIC BEHAVIOR ECONOMIC BENEFITS ECONOMIC DEVELOPMENT ECONOMIES OF SCALE EFFICIENT ALLOCATION EFFICIENT ALLOCATIONS ELECTRIC GRID ELECTRIC POWER ELECTRIC POWER GENERATION ELECTRIC POWER SYSTEMS ELECTRIC SYSTEM ELECTRIC SYSTEMS ELECTRICITY ELECTRICITY CONSUMPTION ELECTRICITY EXCHANGE ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY MARKET ELECTRICITY PRODUCTION ELECTRICITY SECTOR ELECTRICITY SUPPLY ELECTRICITY SYSTEMS ELECTRICITY TRADE ELECTRIFICATION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY REGULATORY COMMISSION ENERGY SECTOR ENERGY TRANSMISSION EXCESS ELECTRICITY FIRST ORDER CONDITION FIXED COSTS FOSSIL FOSSIL FUEL GENERATION GENERATION ASSETS GENERATION CAPACITY GENERATION OF ELECTRICITY GENERATORS GRIDS INFRASTRUCTURE SERVICES MARGINAL COSTS MARKET DISTORTIONS MICROECONOMICS NUCLEAR POWER NUCLEAR POWER PLANTS OPEN ACCESS PEAK DEMAND PEAK DEMAND PERIODS POLITICAL ECONOMY POSITIVE PRODUCTION POWER POWER FLOWS POWER MARKETS POWER PLANT POWER PLANTS POWER POOLS POWER SECTOR POWER SECTOR REFORM POWER SHORTAGES POWER SUPPLIES POWER SUPPLY POWER SYSTEM POWER SYSTEMS PRESENT VALUE PRICE ADJUSTMENTS PRODUCTION OF ELECTRICITY PRODUCTIVITY PUBLIC SECTOR RENEWABLE GENERATION RETAIL ELECTRICITY RISK SHARING SOCIAL SURPLUS SUNK COSTS SUPPLY OF ELECTRICITY TRANSMISSION CAPACITY TRANSMISSION CONSTRAINTS TRANSMISSION GRID TRANSMISSION LINES TRANSMISSION ORGANIZATION TRANSMISSION SYSTEM UTILITIES WIND Nikandrova, Arina Steinbuks, Jevgenijs Contracting for the Second Best in Dysfunctional Electricity Markets
relation	Policy Research Working Paper;No. 6955
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Nikandrova, Arina Steinbuks, Jevgenijs
author_facet	Nikandrova, Arina Steinbuks, Jevgenijs
author_sort	Nikandrova, Arina
title	Contracting for the Second Best in Dysfunctional Electricity Markets
title_short	Contracting for the Second Best in Dysfunctional Electricity Markets
title_full	Contracting for the Second Best in Dysfunctional Electricity Markets
title_fullStr	Contracting for the Second Best in Dysfunctional Electricity Markets
title_full_unstemmed	Contracting for the Second Best in Dysfunctional Electricity Markets
title_sort	contracting for the second best in dysfunctional electricity markets
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/06/19747558/contracting-second-best-dysfunctional-electricity-markets http://hdl.handle.net/10986/19369
_version_	1764443737214156800

Contracting for the Second Best in Dysfunctional Electricity Markets

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