A new approach to congestion pricing in electricity markets: Improving user pays pricing incentives |
| |
Affiliation: | 1. State Grid Hunan Electric Power Company Limited Economic & Technical Research Institute, Changsha 410004, China;2. Hunan Key Laboratory of Energy Internet Supply-demand and Operation, Changsha 410004, China;3. State Grid Changsha Power Supply Company, Changsha, 410015, China |
| |
Abstract: | Electricity pricing has traditionally been based on average cost pricing where consumers pay a ‘flat’ tariff based upon the average cost of production and transportation of electricity. The introduction of new ‘smart’ meters allows electricity providers to differentiate tariffs on the basis of time. Utilising congestion pricing theory, the energy industry has embraced ‘time-of-use’ (ToU) tariffs with a view to more efficiently pricing electricity. This paper demonstrates that pricing as a function of demand variability (reflecting capacity utilisation) is a more appropriate alternative to existing ToU tariffs for more efficiently allocating costs to end users. We call this new alternative pricing model ‘first derivative ratio’ FDR pricing. This new approach to congestion pricing could be applied to markets other than electricity, such as road transportation. |
| |
Keywords: | |
本文献已被 ScienceDirect 等数据库收录! |
|