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Competitive Environment
Process of Disassembling the power
industry and reassembling it into modified
functional organization
Brings better results in terms of
performance and efficiency
By
It is achieved by deregulating the
Saikrishna Dasari electrical utilities
Dept. of EEE
Regulated and Deregulated power
PVKKIT
systems
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Improved Managerial
Encouragement of Innovations: Efficiencies
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Models of Electricity Markets PoolCo Model:
Also known as direct access models This model is the combination of different
Consumers can contract directly with the characteristics of above two models
generating companies It differs form PoolCo model, the use of
Consumers transmits required power by power exchange is not necessary
forming suitable approach & pricing Consumers are permitted to sing bilatral
standards as conformed to the power contracts & choose suppliers from the
transmission and distribution over utility pool
wires
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Market Clearing Price:
Market Power:
Ability of a firm to increase or control the The market place at
market price over a competitive level which the quantity of
energy supplied matches
Spot Market: the quantity of energy
It is a market where the buyers and demand & the buyers
sellers interact & agree either mutually or and sellers can agree on
through an exchange on transmission for that price is known as
immediate delivery “Market Clearing Price
(MCP)”
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There are two types of market operations These are combinely called as forward
markets
Day-ahead & Hour-ahead Markets Here MCPs and electric quantities are
determined independently for every hour
Elastic & Inelastic Markets of the day depending upon the participant
bids
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A market in which a small change in price By employing suitable approaches all
may lead to a greater change in demand restructuring schemes are considering
is known as “Elastic Market” and demand congestion cost into account in order to
is said to be elastic calculate the congestion costs and assign
The market in which a drastic change in these costs to the users of transmission
price may not cause any change in system
demand is known as “Inelastic Market” Based on the following three basic
and the demand is said to be inelastic methods these approaches are evolved as
demand follows
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(i) Cost of Out-of-merit dispatch: (ii) Locational Marginal Prices
This is suitable for a system having This technique depends on the supplying
invaluable problems of transmission energy cost to the succeeding load at a
problems particular location on the transmission
grid
In this approach, based on the load ratio It evaluates the price paid for energy by
share of transmission system congestion buyers in a competitive market at
costs are assigned to each load particular locations & by observing the
variations in LMPs between two locations
congestion costs are measured
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Time frame for price curve Time frame for price curve
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Types of forward price curves: (i) Backwardation:
The forward electricity price plays a major
role for pricing retail & wholesale electricity It is a market condition in which the spot
price exceeds the future prices
The use of these curves by knowing the
information such as consumer characteristics It also known as inverted market
& supply/demand conditions, gives rise to It gives the relation between forward and
hedging strategies for various participants of spot market in which the shorter dated
market like marketers, suppliers & constracts deals with higher price & the
independent power suppliers longer dated constracts deals market with
The curve includes three variations lower price
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