Dear colleagues,The next ENRE online event will take place next week on Thursday March 25th starting at 15:00 GMT (be aware that time zone differences may have changed because of differences in summer time adjustments). The subsequent event will take place on April 22nd at 15:00 BST. See below for details of both events.
Link: ed-ac-uk.zoom.us/j/88097951730 (Meeting ID: 880 9795 1730, Passcode: enre1234)Please feel free to forward this invitation to anyone who might be interested. For more information and recordings of past seminars, see blogs.ed.ac.uk/enre
If you enjoy these sessions and are a member of INFORMS, please consider signing up to become a member of ENRE, which gives access to all community events and helps us continue our work.
Miguel Anjos
Harry van der Weijde
Lars Schewe
25 March 2021 15:00-16:30 GMT
Benjamin F. Hobbs (Johns Hopkins University) & Qingyu Xu (Princeton University): Economic Efficiency of Alternative Border Carbon Adjustment Schemes: A Case Study of California Carbon Pricing and the Western North American Power Market
Abstract: A local jurisdiction that regulates power plant emissions, but participates in a larger regional market faces the issue of emissions leakage, in which local emissions decrease, but emissions associated with the imported power increase. Border carbon adjustment (BCA) schemes can be imposed on imports in order to lessen leakage. This paper explores the potential cost and emission impacts of alternative BCA policies that could be implemented in the AB32 California carbon pricing system. We focus on cost and emission impacts on the power sector in California and the rest of the Western Electricity Coordinating Council (WECC) region, the latter of which provides approximately 23.5% of California's electricity requirements. With a detailed WECC generation-transmission expansion planning model for the year 2034 called JHSMINE, we examine several deemed emission rate schemes for estimating and charging for emissions associated with electricity imports. The model simulates the power, renewable credit, and carbon markets, accounting for the flows of each among states and each state's rules concerning RECs and CO2 imports. The schemes compared include: no BCA, facility (import source)-specific deemed rate, a facility-neutral and constant deemed rate, and a facility-neutral and dynamic deemed rate. Our results suggest that, compared with cases with no BCA or BCA using facility-based deemed emission rates, facility-neutral schemes can provide efficiency gains by simultaneously lowering WECC-wide emissions and costs without raising payments by California consumers. Emissions leakage declines greatly. The precise value of the deemed rate affects these gains. One particular facility-neutral dynamic scheme in which rates are set by marginal emission rates external to California provides the greatest gain in economic efficiency. Our results also show the impact of carbon pricing and BCAs on transmission investment economics: California's unilateral AB32 carbon pricing encourages more interstate transmission expansion because power imports are more profitable; however, BCAs that are cost-effective in lowering total regional emissions will dampen those incentives. We also compare the cost-effectiveness of different deemed rates to alternative renewable portfolio standards and find that for a small carbon-regulated regime embedded in a large power market, a RPS can have advantages.Link: ed-ac-uk.zoom.us/j/88097951730 (Meeting ID: 880 9795 1730, Passcode: enre1234)22 April 2021 15:00-16:30 BST
Richard O'Neill (ARPA-E): Pricing in Dynamic ISO markets with Unit Commitment
Abstract: We examine the pricing mechanisms in multi-period ISO markets with unit commitment and co-optimized energy and reserves-a non-convex market with scale economies - and present an approach to pricing called average incremental cost (AIC) pricing. The market rules include offer mitigation to incremental costs and that excursions from the dispatch signal are charged at a minimum of the costs of redispatch (aka liquidated damages). A generator offer includes startup and fixed-operating costs per period, and a multi-step marginal-cost function with minimum and maximum operating levels, ramp rate limits and minimum run times. Consumers bid simple step-function demand. The pricing procedure relaxes each binary variable bounded by zero and its optimal value. Cut sets are added to allocate the excess capacity costs from lumpy commitments to prices, but avoid degeneracy. The result is locational incremental prices (LIPs) that are conceptually similar to LMPs in convex markets. No dispatched generators lose money at the LIPs. No make-whole payments or uplift are needed. Incremental generators make zero profits and infra-incremental generators make positive profits Demand pays Ramsey–Boiteux prices. Small examples are presented to illustrate the procedure. The results for actual MISO day-ahead market instances validate the procedure's theoretical properties.Jacob Mays (Cornell University): Efficient Prices under Uncertainty and Non-ConvexityAbstract: Operators of organized wholesale electricity markets attempt to form prices in such a way that the private incentives of market participants are consistent with a socially optimal commitment and dispatch schedule. In the U.S. context, several competing price formation schemes have been proposed to address the non-convex production cost functions characteristic of most generation technologies. This paper considers how the design and analysis of price formation policies for non-convex markets is affected by the uncertainty inherent in electricity demand and supply. We argue that by excluding uncertainty, the analytical framework underlying existing policies mischaracterizes the incentives of market participants, leading to inefficient price formation and poor incentives for flexibility. We establish favorable theoretical properties of a new construct, ex ante convex hull pricing, demonstrate the difference between this policy and existing methods on an ISO-scale test system, and discuss the implications for price formation in organized wholesale markets.------------------------------
Miguel F. Anjos, Ph.D., P.Eng., FHEA, SMIEEE, FEUROPT, FCAE
President, INFORMS Section on Energy, Natural Resources, and the Environment (ENRE)
Chair of Operational Research, School of Mathematics, University of Edinburgh, U.K.
Inria International Chair
Schöller Senior Fellow 2020
http://www.miguelanjos.com/------------------------------