Economics of Electricity Markets, Competition and Rules

This comprehensive and up-to-date book explains the economic rationale behind the production, delivery and exchange of electricity. Cretì and Fontini explain why electricity markets exist, outlining the economic principles behind the exchange and supply of power to consumers and firms. They identify the specificities of electricity, as compared to other goods, and furthermore suggest how markets should be optimally designed to produce and deliver electricity effectively and efficiently. The authors also address key issues, including how electricity can be decarbonized. Written in a technical yet accessible style, this book will appeal to readers studying power system economics and the economics of electricity, as well as those more generally interested in energy economics, including engineering and management students looking to gain an understanding of electricity market analysis.

Introduction; Part I. Introduction to Energy and Electricity: 1. Basic principles, definitions and unit measures; 2. Introduction to electricity; brief history of the power industry; Part II. The Basic Design of the Electricity Systems and Markets: 3. The electricity systems and the electricity supply chain; 4. The four market designs of the electricity system; 5. Energy products and the time-dimension of electricity markets; 6. Some principles of regulation of the electricity sector; Part III. Simplified Isolated Markets without Network Congestions: 7. Load and power generation; 8. The centralized solution of optimal dispatching; 9. Welfare maximisation with time - varying load; 10. The market solution to optimal dispatching; 11. Balancing markets; Part IV. Competition in Wholesale Electricity Markets: 12. Wholesale market competition; 13. Market power in electricity markets; Part V. Introducing Transmission Networks: Network Congestions and Electricity Import-Export: 14. Electricity transmission: basic principles; 15. Meshed networks and congestion; 16. Transmission pricing in practice; 17. From nodal prices to transmission capacity expansion; 18. Transmission rights and price risk hedging; Part VI. Economics of Electricity Retail Markets: 19. Retail competition: supplying electricity to final consumers; 20. Assessing the benefits of retail competition; Part VII. Investing in Power Generation: 21. Optimal investment in power generation; 22. Energy-only markets vs markets with capacity remuneration mechanisms; 23. Capacity remuneration mechanisms; Part VIII. Environmental Challenges and the Future of Electricity Markets: 24. Global warming and the electricity markets; 25. Renewable energy sources and electricity production; 26. The integration of renewable energy sources in the electricity system; 27. Smart grids.

Anna Cretì is Full Professor at the Université de Paris IX (Paris-Dauphine), Senior Research Associate at the Ecole Polytechnique and External Affiliate of the Siebel Institute at the University of California, Berkeley. She is the Scientific Director of The Climate Economics Chair and the Natural Gas Chair at Université de Paris IX (Paris-Dauphine). She is the author of numerous articles in international peer-reviewed journals.
Fulvio Fontini is Professor of Economics at the Department of Economics and Management, Università degli Studi di Padova, Italy. He has been co-chair of the ESS task force of the Council of European Energy Regulators (CEER), and member of several task forces of CEER and the Agency for Cooperation of Energy Regulators, where he was seconded as National Expert. He is the author of numerous articles in international peer-reviewed journals.