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Author
Date
2023Type
- Doctoral Thesis
ETH Bibliography
yes
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Abstract
This work examines how we can derive economic signals from the non- convex optimal value functions of mixed integer programs used to dispatch resources in the power grid. The objectives of market design and price formation are to promote economic efficiency, by providing prices that support social surplus-maximizing operations in the short-run and investment in the long-run. Under certain restrictive conditions, these are prices that reflect short-run marginal costs (including scarcity costs), and provide recovery of fixed costs in the long-run. Two critical features of electricity limit its ability to achieve the theoretical microeconomic ideal of perfect long-run cost recovery via marginal pricing: the physics of the grid and non-convex costs of generators. This thesis uses a series of engineering-economic models of optimal power plant scheduling and investment to explore alternative market designs to maximize the economic surplus of consumers. Chapter 2 provides the mathematical theory to compare central planning and markets. Chapters 3, 6, and 7 examine short-run market design to manage transmission congestion, the impact of near-optimal solutions under elastic demand, and market power in non-convex markets, while Chapters 4 and 5 focus on investment, modeling the long-run investment efficiency implications of alternative short-run designs for deriving prices when operating costs are non-convex and shares of variable renewable energy increase. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000619897Publication status
publishedExternal links
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Contributors
Examiner: Hug, Gabriela
Examiner: Hobbs, Benjamin F.
Examiner: Hogan, William W.
Examiner: Oren, Shmuel
Publisher
ETH ZurichOrganisational unit
09481 - Hug, Gabriela / Hug, Gabriela
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ETH Bibliography
yes
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