Volume 7, Issue 4 (December 2011)                   IJEEE 2011, 7(4): 292-301 | Back to browse issues page

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Salarkheili S, Akbari Foroud A, Keypour R. Analyzing Capacity Withholding in Oligopoly Electricity Markets Considering Forward Contracts and Demand Elasticity . IJEEE 2011; 7 (4) :292-301
URL: http://ijeee.iust.ac.ir/article-1-393-en.html
Analyzing Capacity Withholding in Oligopoly Electricity Markets Considering Forward Contracts and Demand Elasticity
S. Salarkheili , A. Akbari Foroud , R. Keypour
Abstract:   (8616 Views)
In this paper capacity withholding in an oligopolistic electricity market that all Generation Companies (GenCos) bid in a Cournot model is analyzed and the capacity withheld index, the capacity distortion index and the price distortion index are obtained and formulated. Then a new index, Distortion-Withheld Index (DWI), is proposed in order to measure the potential ability of market for capacity withholding. In these indices the impact of demand elasticity on capacity withholding is considered and it is shown that demand elasticity plays an important role for capacity withholding and market power mitigation. Due to the significant role of forward contracts for market power mitigation and risk hedging in power markets, the impacts of these contracts on capacity withholding are considered. The effects of GenCos’ strategic forward contracts on capacity withholding are also discussed. Moreover, the relationship between capacity withholding of GenCos and market price distortion is acquired. A two-settlement market including a forward market and a spot market is used to describe GenCos’ strategic forward contracting and spot market competition.
Keywords: Market Power , Capacity Withholding , Forward Contract , Demand Elasticity
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Type of Study: Research Paper | Subject: Restructuring
Received: 2011/05/01 | Revised: 2011/12/24 | Accepted: 2011/07/20
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