Quantitative assessment of electricity market designs : illustrations of short-term and long-term dynamics

Abstract : Following power market reforms, market design, i.e. the study of new markets to replace efficiently the previous monopoly, becomes central in the economic literature. However, due to several technical characteristics of electricity, this task is complex. A third party is then required to help design these markets in an efficient way and to set the rules under which private decentralized market players will interact. This complexity explains why market design remains a work in progress. This thesis contributes to the current discussions by giving insights on the most efficient market designs to implement to ensure the reliability of power systems.A first focus is made on the short-term dimension of reliability, i.e. the security of power systems. To maintain a balanced system, the system operator has to ensure the availability of a sufficient level of reserves in real time: this is the aim of the security model. In this thesis, a quantitative assessment of the economic impacts that a transition to a different security model would have for the French power system is carried out. An agent-based modelling is developed to simulate the decisions of profit-maximizing players on several short-term markets. Simulations show that the current French security model results in lower costs than the alternative one implemented in several European countries, and should therefore be maintained for the French power system.A second focus is made on the long-term dimension of reliability, i.e. the adequacy. The economic performances of a capacity market and a strategic reserve mechanism, two mechanisms designed to solve the adequacy issue, are compared. In order to capture the cyclical nature of investments, these mechanisms are studied from a dynamic point of view. To this end, a long-term model is developed based on a System Dynamics approach. It simulates the investment and shutdown decisions made by market players considering their imperfect behaviours. Main results show that the capacity market solves the adequacy issue at a lower cost than the strategic reserve mechanism.
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Submitted on : Friday, November 30, 2018 - 2:37:12 PM
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  • HAL Id : tel-01926124, version 2

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Nicolas Hary. Quantitative assessment of electricity market designs : illustrations of short-term and long-term dynamics. Economies and finances. PSL Research University, 2018. English. ⟨NNT : 2018PSLEM007⟩. ⟨tel-01926124v2⟩

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