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ELEC70075 Power System Economics

Lecturer(s): Prof Goran Strbac


This course is designed to provide understanding of the fundamentals of power system economics considering alternative market arrangements for the operation and planning of electricity systems. The key focus is on the modellling and analysis of market participants strategies including market power in a competitive electricity market, the impact of demand elasticity on the market outcomes and prices, operational reliability and ancillary services, network congestion and related locational marginal pricing including transmission access rights, coordination of trading between energy and balancing services, investment in generation and transmission assets.

Learning Outcomes

On successfully completing this module, you will be able to: Explain the role of electricity market in supporting efficient system operation and investment in infrastructure; Analyse the market clearing process in a competitive electricity market; Analyse market driven revenues , including contracts, strategies of market participants and market power; Calculate the business cases for generation companies, transmission networks, and consumptions; Co-optimise the energy and reserve in a centralised electricity market; Design and characterize a profit-driven generation expansion model.


Fundamentals of electricity markets: Demand curve and elasticity of the demand Supply curve and marginal cost Market equilibrium and social welfare Consumers’ surplus and suppliers’ economic profit Participants to electricity markets: Generation company (GENCO) Network Companies Retailer / supplier Large / small Consumers Economics models: Transmission economics: marginal transmission prices, congestion surplus, network revenue, network investment Economics and reliability, concept of customer worth of supply. Co-optimisation of energy and reserve in a centralised electricity market Strategic planning for generation companies
Exam Duration: 3:00hrs
Exam contribution: 80%
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