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Electricity Production in a Hydro System with a Reservoir Constraint *
Author(s) -
Mathiesen Lars,
Skaar Jostein,
Sørgard Lars
Publication year - 2013
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12000
Subject(s) - inflow , hydropower , economics , production (economics) , constraint (computer aided design) , electricity market , lead (geology) , market power , market price , electricity , microeconomics , outcome (game theory) , natural resource economics , agricultural economics , environmental science , econometrics , ecology , mathematics , meteorology , geography , monopoly , geometry , engineering , geomorphology , geology , electrical engineering , biology
In this paper, our purpose is to analyze how market power might affect the allocation of production between seasons (summer and winter) in a hydropower system with reservoir constraints and inflow uncertainty. We find that, even without market power, the price in the summer season might be lower than the expected price in the winter season. In some situations, market power can lead to higher sales and a lower price in summer than would be observed in the competitive outcome; in other situations, it can lead to the opposite result. Furthermore, market power can lead to a smaller price difference between summer and winter.