Handbook on Electricity Markets

With twenty-two chapters written by leading international experts, this volume represents the most detailed and comprehensive Handbook on electricity markets ever published.

It covers all dimensions of electricity markets: wholesale and retail; renewable electricity sources; the electrification of mobility, heating and cooling; and recent innovations such as distributed generation, electrical energy storage, demand response and digital platforms that are disrupting the industry.

The benefits, as well as the limits, of open markets and competition are assessed at the level of underlying principles and with reference to specific cases, including the UK, PJM Interconnection, Texas, Australia, Scandinavia, continental Europe and China.

The details of electricity market designs are analysed and discussed. The book also considers new emerging business models, as well as the impact of electricity sector policy priorities such as universal access and deep decarbonization.

This Handbook is intended to be used and useful. Students and young professionals will find the information they need to enter the field. Researchers, experienced professionals and public decision-makers will get a comprehensive update on the topical issues in electricity markets that will guide them through the important developments the sector is witnessing.

1 Introduction to the Handbook on Electricity Markets 1
Jean-Michel Glachant, Paul L. Joskow and Michael G. Pollitt

PART I TAKING STOCK: THE LEGACY
2 Strengths and weaknesses of traditional arrangements for electricity supply 13
Richard Schmalensee
3 Optimal wholesale pricing and investment in generation: the basics 36
Paul L. Joskow and Thomas-Olivier L.autier
4 Wholesale electricity market design 73
Frank A. Wolak
5 The evolution of competitive retail electricity markets 111
Stephen Littlechild
6 Strengths and weaknesses of the British market model 156
David Newbery
7 Strengths and weaknesses of the PJM market model 182
William W. Hogan
8 ERCOT: success (so far) and lessons learned 205
Ross Baldick, Shmuel S. Oren, Eric S. Schubert and Kenneth Anderson
9 Lessons from Australia’s National Electricity Market 1998–2018: strengths and weaknesses of the reform experience 242
Paul Simshauser
10 Strengths and weaknesses of the Nordic market model 287
Chlo. Le Coq and Sebastian Schwenen
11 The evolution of the European model for electricity markets 308
Fabien Roques

PART II ADAPTING TO NEW TECHNOLOGIES AND NEW POLICY PRIORITIES
12 New technologies on the supply side 332
Nils May and Karsten Neuhoff
13 New technologies on the demand side 353
Fereidoon Sioshansi
14 Tools and policies to promote decarbonization of the electricity sector 383
Kathryne Cleary, Carolyn Fischer and Karen Palmer
15 Shifting supply as well as demand: the new economics of electricity with high renewables 408
Richard Green
16 The future design of the electricity market 428
Michael G. Pollitt
17 New business models in the electricity sector 443
Jean-Michel Glachant
18 Electrifying transport: issues and opportunities 463
Bentley C. Clinton, Christopher R. Knittel and Konstantinos Metaxoglou
19 Electrification of residential and commercial heating 506
Mathilde Fajardy and David M. Reiner
20 Harnessing the power of integration to achieve universal electricity access: the case for the Integrated Distribution Framework 540
Ignacio J. P.rez-Arriaga, Divyam Nagpal, Gr.goire Jacquot and Robert Stoner
21 Reforming China’s electricity industry: national aspiration, bureaucratic empires, local interests 568
Xu Yi-chong
22 The evolution of electricity sectors in Africa: ongoing obstacles and emerging opportunities to reach universal targets 595
Vivien Foster, Anton Eberhard and Gabrielle Dyson

Index 629