Abstract
We examine the effects of real-time pricing on welfare and consumer surplus in
electricity markets. We model consumers on real-time pricing who purchase electricity on the wholesale market. A second group of consumers contracts with retailers and pays time-invariant retail prices. Electricity generating firms compete in supply functions.
Increasing the number of consumers on real-time pricing increases welfare and consumer surplus of both types of consumers. Yet, risk-averse consumers on traditional timeinvariant retail prices are always better off. Collectively, our results point to a public good nature of demand response in power markets when consumers are risk-averse.
electricity markets. We model consumers on real-time pricing who purchase electricity on the wholesale market. A second group of consumers contracts with retailers and pays time-invariant retail prices. Electricity generating firms compete in supply functions.
Increasing the number of consumers on real-time pricing increases welfare and consumer surplus of both types of consumers. Yet, risk-averse consumers on traditional timeinvariant retail prices are always better off. Collectively, our results point to a public good nature of demand response in power markets when consumers are risk-averse.
| Originalsprog | Engelsk |
|---|---|
| Publikationsdato | 2021 |
| Antal sider | 31 |
| Status | Udgivet - 2021 |
| Begivenhed | 9th Mannheim Conference on Energy and the Environment - Online, WWW Varighed: 20 maj 2021 → 21 maj 2021 Konferencens nummer: 9 |
Konference
| Konference | 9th Mannheim Conference on Energy and the Environment |
|---|---|
| Nummer | 9 |
| Lokation | Online |
| Land/Område | WWW |
| Periode | 20/05/2021 → 21/05/2021 |
Emneord
- Electricity
- Real-time pricing
- Market power
- Efficiency