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SUMMARY:Perspectives on market designs for low carbon economies - Alberto 
 Lamadrid (Lehigh University)
DTSTART:20240701T113000Z
DTEND:20240701T123000Z
UID:TALK217939@talks.cam.ac.uk
CONTACT:Jacque Woolley
DESCRIPTION:Obtaining appropriate market-clearing prices for electricity m
 arkets is a challenging problem due to the way in which electricity is pro
 duced\, transmitted and consumed\, as well as the fact that electricity\, 
 loosely speaking\, cannot yet be economically stored. Thus\, in many elect
 ricity markets (e.g.\, California ISO\, PJM Interconnection\, New York ISO
 \, New England ISO\, ERCOT\, and Nordpool)\, a market administrator is tas
 ked with the central administration of the market that is referred as the 
 independent system operator (ISO). One of these challenges arises from the
  increasing penetration of variable renewable energy sources (VRES)\; like
  solar\,\nwave and wind generators\, as a result of efforts to move toward
 s a low carbon economy. Namely\, the uncertain nature of the power generat
 ed by VRES generating units introduces\nuncertainty in the market-clearing
  model used to compute the desired market-clearing prices. In this talk I 
 present a framework to study the problem of deriving financially adequate 
 prices for trading electricity under a centralized auction with environmen
 tal considerations. Our model has producers using conventional technologie
 s with byproduct emissions\; and environmentally clean producers subject t
 o exogenous weather realizations\, but lower emissions\nin production. For
  this purpose\, we derive a new financially adequate market clearing prici
 ng scheme. Unlike related financially adequate pricing schemes that only t
 ake into account the marginal market costs associated with market clearing
  commodity demands\, the proposed pricing scheme also takes into account t
 he marginal market costs associated with the market participants operating
  at maximum capabilities. The proposed pricing scheme allows to analyze th
 e effects of environmental limitations in the market\, as it internalizes\
 , in the pricing signals\, the costs or benefits associated with complianc
 e of these limits by the market participants\; and in particular\, convent
 ional technology producers.
LOCATION: Cambridge Judge Business School\, W4.03
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