The Economics of Electricity Markets

With the transition to liberalized electricity markets in many countries, the shift to more environmentally sustainable forms of power generation and increasing penetration of electric vehicles and smart appliances, a fundamental understanding of the economic principles underpinning the electricity industry is vital. Using clarity and precision, the authors successfully explain economic theory of all liberalized electricity market types from a cross-disciplinary engineering and policy perspective. No prior engineering knowledge or economics expertise is assumed in introducing key ideas such as nodal pricing, optimal dispatch and efficient pricing or in extending those models to areas including investment, risk management and the handling of contingencies.

Key features:

• Comprehensively covers the principles of all liberalized electricity market types, including the US, Europe, New Zealand and Australia.
• Provides up to date coverage of research and policy issues, including design of financial transmission rights, modeling of market power, problems of regional pricing, and design of distribution pricing to facilitate Smart Grid.
• Spans introductory material to cutting-edge thinking on risk-management and short-run dispatch.
• Supports independent learning and teaching with worked examples and problems, enabling the reader to test and further deepen their understanding, whilst also promoting their insight and intuition.
• Solutions to problems and figures are hosted on a companion website.

This ground-breaking text is an indispensable resource for the next generation of engineers, economists and policy-makers in or preparing to enter the electricity sector. Graduate students in electrical engineering and economics will benefit from the breadth of material and detailed, economically precise presentation.

Dr Biggar is Australia’s leading expert on the economics of wholesale electricity markets and the economics of public utility regulation. Since 2002 he has provided economic advice primarily to the Australian Energy Regulator and the Australian Competition and Consumer Commission. He has also provided advice to other government agencies including the Australian Energy Markets Operator, the Australian Energy Markets Commission, and the New Zealand Electricity Authority. He has published a number of papers in academic journals in the economics of electricity markets and the economics of public utility regulation and regularly provides training courses in these areas to government agencies and industry. He has a particular interest in the assessment of market power in wholesale electricity markets and in matters related to wholesale market design.

Dr Hesamzadeh is assistant professor in electric power systems division of the school of electrical engineering at KTH Royal Institute of Technology in Stockholm, Sweden. Dr Hesamzadeh is a world leader in the modelling of market power in wholesale electricity markets, particularly in the context of transmission planning. His special fields of interests include Power Systems Planning and Design, Economics of Wholesale Electricity Markets, and Mathematical Modelling and Computing. Hesamzadeh is currently working towards his Docent degree in Electricity Markets at KTH.