• Energy Research

One of the most important aspects that may affect market welfare is that related to the low demand responsiveness to price. This situation may greatly impact the market performance causing low efficiency, high prices and a disproportional allocation of surpluses. The structure of electricity markets is usually oligopolistic; producers may bid prices higher than their marginal costs to the short run wholesale market, inducing outcome deviations from the perfect competitive benchmark. The possibility of gaming the market is amplified in the presence of low demand responsiveness to price. This paper proposes a model to assess the role of demand elasticity in mitigating the effects of supply side strategic bidding behavior. We model the supply side in a conjectural supply function (CSF) framework, which allows incorporation of exogenous changes in demand elasticity and different levels of competition in a given market. The impacts of demand responsiveness on the market performances are assessed through a set of proposed indices that are applied to a model of the Italian market.

Power system controls are vulnerable to cyber-attacks that can seriously affect and even inhibit their operation. Such attacks may affect large portions of the power system, make repair difficult and cause huge societal impact, so pressure to ensure cyber-security of control and communication systems is now strong worldwide. Several cyber-security frameworks were developed, but it is rather difficult to anticipate adoption costs and benefits, and this hampers their generalised adoption. T his paper focuses on the outcome of two case studies (concerning the Italian power generation and the Polish transmission systems. The socio-economic impact of failures and the costs of standard adoption are estimated on an objective basis. It is up to public authorities to decide whether to require the adoption of security standards to operators in the electric system. The nature of public good of security underlines the necessity of public support for this operation, but we discuss the extent and the management of this support.

Competition has been introduced in the electricity markets with the goal of reducing prices and improving efficiency. The basic idea which stays behind this choice is that, in competitive markets, a greater quantity of the good is exchanged at a lower and a lower price, leading to higher market efficiency. Electricity markets are pretty different from other commodities mainly due to the physical constraints related to the network structure that may impact the market performance. The network structure of the system on which the economic transactions need to be undertaken poses strict physical and operational constraints. Strategic interactions among producers that game the market with the objective of maximizing their producer surplus must be taken into account when modeling competitive electricity markets. The physical constraints, specific of the electricity markets, provide additional opportunity of gaming to the market players. Game theory provides a tool to model such a context. This paper discussed the application of game theory to physical constrained electricity markets with the goal of providing tools for assessing the market performance and pinpointing the critical network constraints that may impact the market efficiency. The basic models of game theory specifically designed to represent the electricity markets will be presented. IEEE30 bus test system of the constrained electricity market will be discussed to show the network impacts on the market performances in presence of strategic bidding behavior of the producers. Accepted for publication in the European Journal of Physics B. Presented at the Int. Conf. NEXT-SigmaPhi, 13-18 August 2005, Crete