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Article

Economizing the Uneconomic: Markets for Reliable, Sustainable, and Price Efficient Electricity

1
Civil and Environmental Engineering Department, Stanford, Palo Alto, CA 94305, USA
2
Electrical and Computer Engineering Department, University of Michigan, Ann Arbor, MI 48109, USA
*
Author to whom correspondence should be addressed.
235 Embarcadero Road, Palo Alto, CA 94301, USA.
Academic Editor: Mohammad Jafari
Sustainability 2021, 13(8), 4197; https://doi.org/10.3390/su13084197
Received: 20 February 2021 / Revised: 19 March 2021 / Accepted: 21 March 2021 / Published: 9 April 2021
(This article belongs to the Special Issue Renewable Energy Technologies for Sustainable Development)
Current electricity markets do not efficiently achieve policy targets i.e., sustainability, reliability, and price efficiency. Thus, there are debates on how to achieve these targets by using either market mechanisms e.g., carbon and capacity markets, or non-market mechanisms such as offer-caps, price-caps, and market-monitoring. At the same time, major industry changes including demand response management technologies and large scale batteries bring more elasticity to demand; such changes will impact the methodology needed to achieve the above mentioned targets. This work provides market solutions that capture all three policy targets simultaneously and take into account the above-mentioned industry changes. The proposed solutions are based on: (i) a model of electricity markets that captures all the above mentioned electricity policy targets; (ii) mechanism design and the development of a framework for design of efficient auctions with constraints (individual, joint homogeneous, and joint non-homogeneous). The results show that, within the context of the proposed model, all policy targets can be achieved efficiently by separate capacity and carbon markets in addition to efficient spot markets. The results also highlight that all three policy targets can be achieved without any offer-cap, price-cap, or market monitoring. Thus, within the context of the proposed model, they provide clear answers to the above-mentioned policy debates. View Full-Text
Keywords: electricity policy; electricity market; mechanism design; auctions with constraints electricity policy; electricity market; mechanism design; auctions with constraints
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MDPI and ACS Style

Rasouli, M.; Teneketzis, D. Economizing the Uneconomic: Markets for Reliable, Sustainable, and Price Efficient Electricity. Sustainability 2021, 13, 4197. https://doi.org/10.3390/su13084197

AMA Style

Rasouli M, Teneketzis D. Economizing the Uneconomic: Markets for Reliable, Sustainable, and Price Efficient Electricity. Sustainability. 2021; 13(8):4197. https://doi.org/10.3390/su13084197

Chicago/Turabian Style

Rasouli, Mohammad, and Demosthenis Teneketzis. 2021. "Economizing the Uneconomic: Markets for Reliable, Sustainable, and Price Efficient Electricity" Sustainability 13, no. 8: 4197. https://doi.org/10.3390/su13084197

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