Crampes, Claude and Renault, Jérôme (2018) Supply flexibility in electricity markets. TSE Working Paper, n. 18-964, Toulouse

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Abstract

The development of non-dispatchable renewable sources of energy requires more flexible reliable thermal equipment to match residual demand. We analyze the advantages of delaying production decisions to benefit from more precise information on states of the world, at the expense of higher production costs in a two-period framework where two technologies with different flexibility characteristics are available. We determine firstbest production levels ex ante and ex post, that is, when demand is still random and is known with certainty respectively. We then show that, under perfect competition, first best can be implemented indifferently either by means of ex post state-contingent markets or by means of a day-ahead market followed by adjustment markets. By contrast, when the industry is imperfectly competitive, the two market designs are not equivalent.

Item Type: Monograph (Working Paper)
Language: English
Date: July 2018
Place of Publication: Toulouse
JEL Classification: C72 - Noncooperative Games
D24 - Production; Cost; Capital and Total Factor Productivity; Capacity
L23 - Organization of Production
L94 - Electric Utilities
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Toulouse Capitole University
Site: UT1
Date Deposited: 19 Nov 2018 11:37
Last Modified: 09 Nov 2021 16:42
OAI Identifier: oai:tse-fr.eu:33094
URI: https://publications.ut-capitole.fr/id/eprint/26431

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