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ELEC97069 (EE9-FPN2-11) Power System Economics

Lecturer(s): Prof Goran Strbac


This course is designed to give you an understanding of the economic principles underlying the operation and planning of the electricity systems including concepts of electricity markets and competition in electricity generation and supply, and the opening of the transmission and distribution systems to third party access.

Learning Outcomes

Be able to describe the principles and analyse economics of operation and pricing of electricity generation within a transmission network;
Be able to describe and analyse electricity market place, including contracts, strategies of market participants and market power;
Be able to describe and analyse problem of investment in electricity system, with particular focus on transmission networks;
Be able to describe the role of electricity regulators in facilitating cost effective operation and development of electricity system.


Key economic concept of electricity system design and operation, market players, alternative structures of the electricity industry. Electricity marketplaces, role of spot (balancing) markets and power exchanges. Behaviour of participants, market power.
Locational marginal pricing, impact of losses and network constraints, modelling of network constraints, concept of contract networks, locational hedging.
Costing and pricing of transmission networks, vlaue of transmission, need for regulation, alternative approaches to investment pricing.
Economics and reliability, concept of customer worth of supply.
Regulation approaches, revenue recovery and pricing of distribution services.
Impact of distributed generation.
Exam Duration: 3:00hrs
Coursework contribution: 20%

Term: Autumn

Closed or Open Book (end of year exam): Closed

Coursework Requirement:
         To be announced

Oral Exam Required (as final assessment): N/A

Prerequisite module(s): None required

Course Homepage: unavailable

Book List:
1."Fundamentals of Power System Economics" (Wiley, 2004) D Kirschen, G Strbac
2.Chapter 12 in "Electric Power Systems" (Wiley 2012) Weedy, B. M.; Cory, B. J.; Jenkins, N.; Ekanayake, J. B.; Strbac,G