Objectives

The aim of the course is that the students learn methods and models for how the price is formed in an electricity market. The course comprises background information about possible ways to design an electricity market, impact from congestions, treatment of externalities such as methods to limit emissions, risk analysis and market power. Applied optimization is shown to be one suitable method to simulate market behaviour.

To pass the course, the students should show that they are able to:

•    describe the principles of how an electricity market can be organised,

•    describe treatment of flexible load

•    describe methods to handle congestion in power markets,

•    describe methods for analyzing prices in markets with limited competition,

•    describe basic methods for financial risk management in power markets,

•    describe methods to handle externalities, such as environmental problems, in electricity markets,

•    perform calculations of pricing in small systems with one of the above characteristics.

To receive a higher grade (A, B, C, D) the students should also show that they are able to:

•    analyze pricing in larger power systems with combinations of several of the above named characteristics.

•    apply methods for analyzing the trade off between low prices and reliability in larger power systems,

•    formulate market simulation problems with mathematical expressions

•    analyze investment dynamics in electricity markets.