Spot Pricing of Electricity PDF

There is a need for fundamental changes in the ways society views electric energy.

Electric energy must be treated as a commodity which can be bought, sold, and traded, taking into account its time-and space-varying values and costs.

This book presents a complete framework for the establishment of such an energy marketplace.

The framework is based on the use of spot prices. In general terms: o An hourly spot price (in dollars per kilowatt hour) reflects the operating and capital costs of generating, transmitting and distributing electric energy.

It varies each hour and from place to place. o The spot price based energy marketplace involves a variety of utility-customer transactions (ranging from hourly varying prices to long-term, multiple-year contracts), all of which are based in a consistent manner on hourly spot prices.

These transactions may include customers selling to, as well as buying from, the utility.

The basic theory and practical implementation issues associated with a spot price based energy marketplace have been developed and discussed through a number of different reports, theses, and papers.

Each addresses only a part of the total picture, and often with a somewhat different notation and terminology (which has evolved in parallel with our growing experience).

This book was xvii xviii Preface written to serve as a single, integrated sourcebook on the theory and imple- mentation of a spot price based energy marketplace.