Long-term contracting in hydro-thermal electricity generation: Welfare and environmental impact
Abstract
We consider electricity generation industries where thermal operators imperfectly compete with hydro operators that manage a (scarce) water stock stored in reservoirs over a natural cycle. We explore how the exercise of intertemporal market power affects social welfare and environmental quality. We show that, as compared to the outcome of spot markets, long-term contracting either exacerbates or alleviates price distortions, depending upon the consumption pattern over the water cycle. Moreover, it induces a second-order environmental effect that, in the presence of a thermal competitive fringe, is critically related to the thermal market shares in the different periods of the cycle. We conclude by providing policy insights.
Anno di pubblicazione
2011
ISSN
0957-1787
ISBN
Non Disponibile
Numero di citazioni Wos
2
Ultimo Aggiornamento Citazioni
Non Disponibile
Numero di citazioni Scopus
3
Ultimo Aggiornamento Citazioni
Non Disponibile
Settori ERC
Non Disponibile
Codici ASJC
Non Disponibile
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