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Scarcity pricing is a mechanism for improving the valuation of reserve capacity in real-time electricity markets. The goal of scarcity pricing is to mitigate the missing money problem and enhance investment in flexible resources. The implementation of scarcity pricing is underway in a number of U.S. markets, including Texas and PJM. The implementation is also currently under consideration in Belgium. As the mechanism was originally conceived in the context of a U.S.-style two-settlement system, its implementation in a European setting poses a number of interesting market design dilemmas which can affect the back-propagation of scarcity prices to forward day-ahead markets for energy and reserve capacity. We propose a modeling framework for analyzing these market design choices based on stochastic equilibrium, and use this modeling framework in order to represent and analyze a wide range of market design proposals. We report results on a case study of the Belgian electricity market. Keywords: Scarcity pricing, Operating reserve demand curve, Stochastic equilibrium, 1. INTRODUCTION Scarcity pricing is the principle of pricing electricity at a value above the marginal cost of the marginal unit during conditions of high system stress, according to the [...]

After 50 years of development, building and solving mixed-complementarity problems (MCPs) have become commonplace for policy models that analyze markets. These models are used to develop policies that reshape markets, [...]

6.6 Market Coupling with a Second Case of Imperfectly Coordinated Counter-trading We here consider an alternative organization of the preceding case: the trilateral TSO is split into two bilateral TSOs [...]

Cross-border trade remains a contentious issue in the restructuring of the European electricity market. This paper analyzes the cross-border trade problem through a set of models that represent different degrees [...]

Distributed Resources (DR) is an intriguing subject. It was certainly instrumental in creating the electricity industry at a time when transport costs were simply unbearable. Rejected later by those companies [...]

A stochastic version of the Stackelberg-Nash-Cournot model developed by Murphy et al. (1983) is developed. In the first stage of this framework, the leader firm in an oligopolistic market determines and makes known its production level while considering the reaction of the followers. This decision is made in the context of an uncertain market demand. The second stage is characterized by the followers who are aware of the leader's output respond to this level based on the Cournot assumption. This action is made at a time when demand is known. A numerical application of the model is made to the gas market in Europe. In this environment, the leader is Norway, which had to decide in 1990 in the most intelligent approach for the year 2000 by considering the response of the other producers in 2000.

The problem of distributing gas through a network of pipelines is formulated as a cost minimization subject to nonlinear flow-pressure relations, material balances, and pressure bounds. The solution method is based on piecewise linear approximations of the nonlinear flow-pressure relations. The approximated problem is solved by an extension of the Simplex method. The solution method is tested on real-world data and compared with alternative solution methods. (Mathematics: Piecewise Linear Programming: Natural Resources: Energy Transport; Networks: Applications to Gas Transmission Network)