Title: Analysis of Power Pools in the Deregulated Energy Market through Simulation

Authors: Simo Makkonen and Risto Lahdelma

Status: Decision Support Systems, Vol. 30, No. 3, pp. 289-301, 2001.

Keywords: Deregulated energy market, Energy management, Optimisation, Simulation

The electricity market has changed rapidly in the Northern European countries. Harmonisation of the legislation and trading methods widens the market area outside national limits. Vertical integration among electricity companies is changing the traditional structure of the inner market. Successful business in this new, more volatile market requires sophisticated techniques for identifying new market opportunities and managing the increased risks. We study the new market from the perspectives of regional distributors and power pools. We analyse the trading possibilities and profitability of different kinds of power pools, when a spot market and several new contract structures are available along with existing capacity based long-term contracts. Different policies for allocating the common benefits of a power pool among its members are compared and a new booking algorithm for balance settlement is introduced. To analyse the operation of different kinds of pools, we use simulation and optimisation techniques.