Toward the Value-Based Generation Investments and Utilization: Stratum Electricity Market

In this paper we model and analyze the dependence of electricity market outcomes on the market structures and rules. Market attributes such as electricity prices and their volatility, profits and revenues by the market participants and system cost are assessed. Of particular concerns are the effects of market structures on the long-term generation investments needed to meet long-term uncertain demand. The paper builds upon an earlier introduction of electricity market modeling resulting from the dynamics of fundamental market drivers, such as demand, supply and market clearing processes. This approach is employed to model and simulate the outcomes in the short-term spot markets, and compare these with the potential outcomes in a newly proposed stratum electricity market (SEM) structure comprising both spot and long-term sub-markets. The performance of the newly proposed SEM is illustrated using Monte Carlo simulations on a simple power system in which the only uncertainties come from the load forecasts and fuel prices