ECONOMICS OF ELECTRICITY MARKETS AND ENERGY TRANSITION
Instructional goals
The course analyses the economics of Electricity Markets, and the cpncept of energy transition. It considers what is Electricity, why markets of electricity exist and how are they designed, what is the value exchanged tin the market. How does energy is used and what should we expect in the future. It starts with the basic technicalities and definitions of energy and power; then, it focuses on the structure of power markets and their specificities, in a dynamic and modern perspective. Finally, it focuses on the energy transition and its impact for the economics of electricity
Intended learning outcomes
Students will be able to understand and answer questions such as: what is energy transition? is electricity a commodity? what was it invented for? what are energy markets? What are future challenges for conventional and unconventional power production? How important is power for the energy transition? Will it be possible to switch to a 100% renewables power production? Why and how are renewable energy sources subsidized?
Course Contents
Definition of energy sources and energy vectors; Energy: concepts and measures; The Electricity supply chain; History of power systems; Fundamentals of power production and demand ; The time dimension of power exchange; Auctions in power systems; Ancillary services’ markets. Power transmission. Renewable energy sources for electricity production; Long term markets and capacity remuneration mechanisms
Reference Books
Creti and Fontini, Economics of Electricity, Markets, Competition and Rules. Cambridge University press, 2019.
Other references will be provided in the lectures
Teaching Methods
Instructor’s lecture. Groupworks and activities will be assigned throughout the course
Assessment Method
Students attending the course will be asked to prepare a teamwork or an individual short essay (depending on the number of students). Topics will be assigned in the last week of the course and then discussed during the exam. For non- attending students, there will be an oral exam.
Thesis assignment criteria
Showing interest for the topic. Having attended the course, prepared and presented the teamwork/essay
Week 1
Introduction to Energy and Electricity. Instructor handout; Chapters 1, 2, 3 of the reference textbook.
Week 2
Electricity systems and Electricity Supply Chain. Ch. 4, 5
Week 3
Regulation of natural monopoly; Simplified Isolated markets without network congestion: cost-based optimal dispatching
Ch 6, 7, 8
Week 4
Simplified isolated markets: optimal dispatching with time-varying load, economic dispatching, market-based short-run equilibria
Ch 9, 10
Week 5
Balancing markets; Competition in electricity markets. Definitions, measures, issues.
Ch 11, 12, 13
Week 6
Power transmission: definitions, characteristics, issues, investments
Ch 14, 15, 17
Week 7
Investments in electricity. Financial markets and physical investments in power generation
Ch 21, 22, 23
Week 8
Retail competition; Distributional issues of electricity; Energy Poverty
Ch 19, 20; supplementary material t.b. d.
Week 9
Global warming and electricity markets . Renewable energy sources and power production
Ch 24, 25. supplementary material t.b. d.
Week 10
The challenges for electricity markets: Storage, Prosumers, Distributed Generation.
Ch 26, 27, supplementary material t.b. d.
Week 11
Renewable energy sources and power production: the future of electricity markets and energy transition
Specific material and papers will be distributed in the lectures.
Week 12
Assignment of students’ teamwork; discussion of the topics. Supplementary material presented during the lecture