Andreas Ehrenmann, Karsten Neuhoff
A comparison of electricity market designs in networks
EP 31 | Non-Technical Summary | PDF
Abstract: In the real world two classes of market designs are implemented to trade electricity in transmission constrained networks. Analytical results show that in two node networks integrated
market designs reduce the ability of electricity generators to exercise market power relative to separated market designs. In multi node networks countervailing effects make an analytic analysis difficult. We present a formulation of both market designs as an equilibrium problem with equilibrium constraints. We find that in a realistic network, prices are lower with the integrated market design.