Miquel Bassart i Loré - Exploring Public Policies and Institutional Settings to Enhance Efficiency in Electric Markets: An Agent-based Analysis

  • Presenting author: Miquel Bassart i Loré (Universität Bielefeld)

  • Authors: Miquel Bassart i Loré

  • Session: B02D - Energy - Tuesday 11:00-12:30 - Erika-Weinzierl Hall

This extended abstract outlines a study that aims to examine the potential impact of different public policies and institutional settings on retail electricity prices and market efficiency. The study utilizes an agent-based model, which simulates the interactions among various agents in electric markets, including generators, transmission system operators (TSOs), distribution system operators (DSOs), regulators, retail electricity providers (REPs), and consumers.

The main objective of this study is to explore the expected outcomes of policies and institutional arrangements that could potentially reduce retail electricity prices while maintaining a given production capacity in the short run. Specifically, we focus on contrasting the current subsidies to wholesale gas prices, prevalent in Spain and Portugal, with the introduction of aggregators to address the incomplete nature of the retail electricity market. It is important to note that current retail consumers do not have direct access to long-term wholesale markets.

Based on our preliminary insights, we anticipate that the introduction of aggregators could be a more efficient approach in reducing retail electricity prices. Enabling retail consumers to participate in long-term wholesale markets through aggregators may promote greater competition and price transparency, ultimately resulting in more affordable electricity prices for end consumers. However, this potential policy change may also have a notable positive effect on spot prices, leading to an increase in short-term electricity costs.

Moreover, we anticipate that the introduction of aggregators could contribute to improved predictability in electricity demand. This enhanced predictability has the potential to facilitate better coordination between TSOs, DSOs, and generators, leading to improved capacity planning and resource allocation. Consequently, overall market efficiency and reliability are expected to be positively influenced.

This study emphasizes the significance of thoughtfully designing public policies and institutional settings to address the intricacies of the electric market. By employing agent-based modeling, we anticipate that our research will provide valuable insights into the potential benefits and trade-offs associated with different policy options. We anticipate that our findings will suggest the potential merits of embracing the role of aggregators in bridging the gap between retail consumers and long-term wholesale markets, offering the possibility of both lower retail prices and improved market coordination.