Title: Sensitivity of reserve margin to factors influencing investment behaviour in the electricity market of England and Wales
Abstract: The electricity generation and distribution industries of England and Wales have recently undergone major re-structuring as part of the privatization process of taking them out of the public sector. On the generation side, three major companies have been created which compete both with each other and with the new independent companies who are expected to enter the market. Trading between generators and distributors is controlled centrally by a pool system which attempts to ensure the optimal operation of the system in the short-term and gives a pricing signal for longer-term investment. This pricing signal depends upon an a priori loss of load probability. This paper is intended to provide insights into how the investment in capacity for generation could evolve according to various regulatory conditions, economic assumptions, degrees of competition and the strategic behaviour of the separate companies. Using a system dynamics approach, a simulation model of investment is developed to generate insights into the volatility of the reserve margin, variations in the loss of load probability and the various market share scenarios. The degree of uncertainty in the demand, the amount of information exchange between competitors and the degree of foresight in planning are considered as well as different financial or market-share objectives for companies.
Publication Year: 1992
Publication Date: 1992-05-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 149
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