Abstract
We examine welfare e ects of real-time pricing in electricity markets. Before stochastic energy demand is known, competitive retailers contract with nal consumers who exogenously do not have real-time
meters. After demand is realized, two electricity generators compete in a uniform price auction to satisfy demand from retailers acting on behalf of subscribed customers and from consumers with real-time meters. Increasing the number of consumers on real-time pricing does not always increase welfare since risk-averse consumers dislike uncertain and high prices arising through market power. In the Bertrand case, welfare is the same with all or no consumers on smart meters.
meters. After demand is realized, two electricity generators compete in a uniform price auction to satisfy demand from retailers acting on behalf of subscribed customers and from consumers with real-time meters. Increasing the number of consumers on real-time pricing does not always increase welfare since risk-averse consumers dislike uncertain and high prices arising through market power. In the Bertrand case, welfare is the same with all or no consumers on smart meters.
| Original language | English |
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| Place of Publication | Frederiksberg |
| Publisher | Copenhagen Business School, CBS |
| Number of pages | 38 |
| Publication status | Published - 2013 |
| Series | Working Paper / Department of Economics. Copenhagen Business School |
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| Number | 1-2013 |
Keywords
- Electricity
- Real-time Pricing
- Market Power
