Table Of ContentEvolution of Global Electricity Markets
New Paradigms, New Challenges, New Approaches
Evolution of Global
Electricity Markets
New Paradigms, New Challenges,
New Approaches
Edited by
Fereidoon P. Sioshansi
Menlo Energy Economics
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AcademicPressisanimprintofElsevier
This book is dedicated to Paul L. Joskow in recognition of his invaluable
contributions tothe studyof electricitymarkets.
Paul L. Joskow is an economist whose
researchhasfocusedontopicsinindustrial
organization, government regulation, the
organization of firms, law and economics,
energy and environmental economics.
He was on the faculty of the Department
of Economics at MIT from 1972 to 2010
andisnowtheElizabethandJamesKillian
Professor of Economics, Emeritus there.
He has been President of the Alfred
P.SloanFoundationsinceJanuary1,2008.
Professor Joskow received a B.A. from
Cornell University in 1968 and a PhD in
Economics from Yale University in 1972.
HeservedasHeadoftheMITDepartment
of Economics from 1994 to 1998 and was
theDirectoroftheMITCenterforEnergy
and Environmental Policy Research from 1999 to 2007. Professor Joskow has
published 6 books and over 125 articles and papers. His papers have appeared
in the American Economic Review, Bell Journal of Economics, Rand Journal
of Economics, Journal of Political Economy, Journal of Law and Economics,
Journal of Law, Economics and Organization, International Economic Review,
ReviewofEconomicsandStatistics,JournalofEconometrics,JournalofApplied
Econometrics, Yale Law Journal, New England Journal of Medicine, Foreign
Affairs,EnergyJournal,ElectricityJournal,OxfordReviewofEconomicPolicy,
andotherjournalsandbooks.
Professor Joskow is a Director of Exelon Corporation, a Director of
TransCanada Corporation, and a Trustee of the Putnam Mutual Funds. He is
a Trustee of Yale University and a member of the Board of Overseers of the
Boston Symphony Orchestra. He previously served as a Director of New
England Electric System, State Farm IndemnityCompany, National Gridplc,
and the Whitehead Institute of Biomedical Research. Professor Joskow has
served on the US EPA’s Acid Rain Advisory Committee and on the
Environmental Economics Committee of the EPA’s Science Advisory Board.
He is a member of the Scientific Advisory Board of the Fondation Jean-
Jacques Laffont (Toulouse, France). He served as President of the Yale
University Council from 1993 to 2006. Professor Joskow is a past-President
of the International Society for New Institutional Economics, a Distinguished
Fellow of the Industrial Organization Society, a Fellow of the Econometric
Society and of the American Academy of Arts and Sciences, a Distinguished
Fellow of the American Economic Association, and a member of the
CouncilonForeignRelations.
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About the Authors
Parviz M. Adib is the founder of Pionergy offering regulatory, economic,
and strategic advices on energy-related topics including the development
and pricing of value added services under smart meters. He has more than
30 years of experience with energy markets and previously worked with
APX Inc., where he identified strategies for clients’ successful operation
in competitive markets. Earlier, Dr. Adib worked at the Public Utility
Commission of Texas where he served in various capacities, including the
director of the Market Oversight Division where he played a key role in
design of electricity market in ERCOT, advised the Commission on emerg-
ing market and regulatory issues, and performed the duties of the first
ERCOT Market Monitor.
Dr. Adib’s main research interests include the development of competitive
markets and customer choice, quantitative assessing of customers behavior,
andenergyandpublicpolicy.
Dr. Adib has a PhDin economics from the University of Texas at Austin,
where he taught graduate and undergraduate courses.
Philip Andrews-Speed is a principal fellow at the Energy Studies
Institute of the National University of Singapore. Until 2010, he was a pro-
fessor of energy policy and director of the Centre of Energy, Petroleum and
Mineral LawandPolicyat the UniversityofDundee.
The focus of his research is on energy policy, regulation, and reform in
China, on the interface between China’s energy policy and international rela-
tions, and on the global and regional governance of energy and natural
resources. Recent books include China, Oil and Global Politics with Roland
Dannreuther (Routledge, 2011) and The Governance of Energy in China:
Transition ofa Low-Carbon Economy(Palgrave MacMillan, 2012).
He has BA and PhD degrees in geology from the University of
Cambridge, and an LLM in Natural Resources Law and Policy from the
University ofDundee.
Hiroshi Asano is a deputy associate vice president, the Central Research
InstituteofElectricPowerIndustry(CRIEPI) inTokyo,Japan,avisiting pro-
fessor, the University of Tokyo, and a visiting researcher, Research Institute
of Advanced Network Technology, Waseda University. In his multiple
capacities, he is engaged in research, teaching, and variety of managerial and
advisory duties.
Dr. Asano has been engaged in research projects on demand-side man-
agement, systems approaches, and energy policy analysis since joining the
ix
x AbouttheAuthors
CRIEPI in 1984. His interests include systems analysis of distributed energy
resources, demand response, andpowermarkets.
He has BEng, MEng, and Doctor of Engineering degrees in Electrical
Engineering fromthe UniversityofTokyo.
Hans Auer is associate professor at Energy Economics Group, Vienna
University of Technology, Austria. He is mainly responsible for supervision
of master’s degree and PhD students as well as acquisition and coordination
of European projects in the field of market integration of renewable technol-
ogiesinto future, innovative grid infrastructures.
Hans is interested in energy systems analyses, energy modeling and
energypolicies withspecial focus onfutureenergymarketandgridinfrastru-
cutre design. In this context, he is interested in the role of and interdepen-
dences between hybrid energy grids (electricity, gas, heating/cooling) for
providing different energy services inparticular.
Hans holds a master’s degree in electrical engineering and a PhD in
energyeconomics from Vienna Universityof Technology.
Ross Baldick is a professor and Leland Barclay fellow in the department
of electrical and computer engineering at the University of Texas at Austin.
Earlier, he was a postdoctoral fellow at the Lawrence Berkeley Laboratory
and anassistant professor at Worcester Polytechnic Institute.
His current research interests include optimization and economic theory
applied to electric power system operations, public policy, transmission plan-
ning, electricity market restructuring, electric system security, electric trans-
portation, and the economic implications of integration of renewables.
Dr. Baldick has over 50 refereed publications and his book, Applied
Optimization,isusedasatextbookinhisOptimizationofEngineeringSystems
course.HeisaformereditorofIEEETransactionsonPowerSystemsandafel-
lowoftheIEEEanddirectoroftheNSFI/UCRConelectricvehicles.
He received his BSc and BE degrees from the University of Sydney,
Australia and his MS and PhD from the Universityof California, Berkeley.
Dierk Bauknecht is a senior researcher with the O¨ko-Institut’s Energy
and Climate Division, which he joined in 2001. He coordinates various pro-
jects onthe system integration of renewables.
His main research interest is the integration of renewables into electric-
ity networks and markets. This includes regulatory issues, system model-
ing, and scenario analysis as well as questions on the governance of system
transformation. He has been involved in the development and application
of electricity dispatch and investment models. He coordinates the institute’s
contribution to the German Smart Grid model region eTelligence and is
engaged in the evaluation and comparison of different flexibility options in
the power system.
Dr. Bauknecht graduated in political science at the Freie Universita¨t
Berlin and holds an MSc and PhD from the Science and Technology Policy
Researchat the UniversityofSussex, UK.
AbouttheAuthors xi
Geoffrey Bertram is a senior associate at the Institute of Policy Studies,
Victoria University of Wellington, and a director of the energy and environ-
mental consultancy Simon Terry Associates Research Ltd. Until 2009, he
taughtinthe School ofEconomics and Finance at VictoriaUniversity.
Dr. Bertram has over 30 years of experience researching and consulting
on New Zealand public utility industries, including electricity, gas, water and
telecommunications, and has published extensively on the deregulation and
restructuring policies pursued by successive New Zealand governments since
the 1980s. He has served on the editorial boards of World Development,
Environment andDevelopmentEconomics, andAsia Pacific Viewpoint.
Dr. Bertram holds BA and BA honors degrees from Victoria University
of Wellington, and MPhil. and DPhil. (in economics) degrees from Oxford
University.
Walter Boltz is executive director of E-Control, the Austrian Energy
Regulator. Before joining E-Control he was active in banking and held man-
agement positions inconsultingcompanies.
His recent activities entail several chairmanships within the Council of
Energy Regulators. Since 2006, Mr. Boltz has been the chairman of the Gas
Working Group and since 2010 vice president of ACER, the Agency for the
Cooperation of Energy Regulators.
Walter Boltz holds a degree in technical physics from Vienna University
of Technology.
Anatole Boute is a lecturer in law at the University of Aberdeen’s
Centre for Energy Law and legal adviser to the IFC Russia Renewable
Energy Program affiliated with the World Bank. Earlier, he was part of the
Energy Law practice of the Brussels lawfirm Janson Baugniet.
His research focuses on the regulatory aspects of the energy transition
toward sustainability, with a special interest for the Russian electricity and
heating system. Anatole Boute has advised the United Nations Conference
on Trade and Development for the World Investment Report 2010 on
investing in a low-carbon economy. As member of the Brussels bar, he
advised on and was involved in litigations concerning energy market liber-
alization, renewable energy, energy efficiency, emissions trading and
nuclear energy.
Anatole Boute has MA degrees in law and political sciences and an LLM
in energy law from the University of Leuven. He also holds a PhD from the
University ofGroningen.
Joseph E. Bowring is the president of Monitoring Analytics, LLC. He
has been the Independent Market Monitor for PJM Interconnection since
1999, responsible for all aspects of market monitoring. His prior experience
includes serving as senior staff economist for the New Jersey Board of
Public Utilities, as chief economist for the New Jersey Department of the
Public Advocate’s Division of Rate Counsel, as an economist at the US
Department of Energy, Energy Information Administration, and as an
xii AbouttheAuthors
independent consulting economist. He has taught economics as a member of
the faculty at Bucknell Universityand VillanovaUniversity.
He received aPhDineconomics fromthe University ofMassachusetts.
Gert Brunekreeft is a professor of energy economics at Jacobs
University Bremen in Germany. Before joining Jacobs University, he was
senior economist for the energy company EnBW AG and held research
positions in applied economics at Tilburg University, the University of
Cambridge and at Freiburg University. He is an associate researcher to a
number of research centers and is an associate editor for the Competition
and Regulation in Network Industries.
Professor Brunekreeft’s main research interests are in industrial econom-
ics, regulation theory, and competition policy of network industries, espe-
cially electricity and gas markets. Current issues concern the economics of
vertical unbundling and the relation between regulation and investment. He
is the author of several books and published widely in academic journals,
including Journal of Regulatory Economics, Utilities Policy, Oxford Review
ofEconomic Policy, and Energy Journal.
He holds a degree from the University of Groningen and a PhD from
FreiburgUniversity,both ineconomics.
Nivalde Castro is a professor at the Institute of Economics of the
Federal University of Rio de Janeiro (FURJ) and the coordinator of Study
Group of the Electric Power Sector (“Grupo de Estudos do Setor Ele´trico”—
GESEL).
Professor Castro’s research interests include the Brazilian electric power
sector and the Latin American countries on issues related to renewable
power—wind, biomass, solar, and hydroelectricity—funding models for new
projects, sustainable matrix, green economy,among others.
He has bachelor’s and master’s degrees in economics and a doctorate in
education fromUFRJ—Universidade Federal do Riode Janeiro.
Youngho Chang is an assistant professor of economics at the division
of economics and an adjunct senior fellow at the S. Rajaratnam School of
International Studies (RSIS), Nanyang Technological University, Singapore.
He is a member of technical committee for Clean Development Mechanism
(CDM), Designated National Authority (DNA), National Environment
Agency,Singapore.
He specializes in the economics of climate change, energy and security,
oil and macroeconomy, andthe economicsofelectricity market deregulation.
His current research interests include the impact of oil price fluctuations in
macroeconomic performance, energy security, energy use, and climate
change. He has numerous publications and coedited two books—Energy
Conservation in East Asia: Towards Greater Energy Security (World
Scientific, 2011) and Energy Security: Asia Pacific Perspectives (Manas
Publications, 2010).
AbouttheAuthors xiii
Dr. Chang received a BASc in landscape architecture from the Seoul
National University, an MA in economics from the Yonsei University and a
PhDineconomics fromthe University ofHawaii at Manoa.
Esther Chrischilles is an economist at the Cologne Institute for
Economic Research within the department of environment, energy and
resources where she studies recent developments in German energy and cli-
mate politics. Currently she is engaged in a transdisciplinary project dealing
with the adaptationtoinevitable impacts ofclimatechange.
Her main research interests concern economic instruments of climate pro-
tection as well as energy use patterns within the industrial sector and the
impact of increasing energy cost on industrial value added. She has pub-
lished several articles and studies concerning different aspects of climate
change andthe German government’s recent turnaround policy.
Ms. Chrischilles holds a diploma from the University of Cologne, where
shestudiedeconomicsspecializinginenergyeconomicsandpoliticalscience.
Isaac Dyner is a professor of operational research and energy policy at
the Universidad Nacional de Colombia. He has been a visiting professor of
the British Academy and academic visitor at Imperial College London, City
University, London Business School, Warwick University, University of
Lugano,and several LatinAmerican universities.
He has over 175 publications in energy, operational research, and system
dynamics in scientific journals as well as five books and four book chapters.
He has been the director of the Centre of Excellence CeiBA, the Institutes
for Decision Sciences and Energy, a member of both Colombian Councils
for Energy Research and for Natural Sciences and Mathematics. He has con-
sulted for businesses and government agencies in the areas of strategy,
deregulation, modeling,and energy.
He obtained his PhD from London Business School and Master of
SciencesfrombothUniversityofWarwickandSouthamptonUniversity,UK.
Carlos J. Franco is a professor in the Department of Computer and
Decision Sciences at the National University of Colombia in the Medellin
campus where he teaches in subjects such as complex systems, system
modeling, and energy markets. Currently, he is the chair of the undergradu-
ate and graduate programsinthe systems andcomputing areas.
His research area is on energy systems analysis, including policies evalu-
ation and strategies formulation. His recent work includes low carbon econo-
mies, electricity markets integration and biofuels, among others. He worked
for the power exchange of Colombia (XM) and the main grid operator of
Colombia (ISA).
Hehasadegreeincivilengineering,amaster’sdegreeinwaterresourcesman-
agement,andaPhDinengineering,allfromtheNationalUniversityofColombia.
Joel Gilmore is the principal of renewable energy and climate policy at
ROAM Consulting, a leading provider of expert services in energy market
xiv AbouttheAuthors
modeling. With more than 9 years of experience in energy market modeling
and analysis, Joel leads a team to model and advise on topics related to the
impacts of climate policy and renewable energy on electricity systems, such
as renewable energy target schemes, carbon pricing, and the integration of
wind and solar energy.
Dr. Gilmore’s accomplishments includes work for market participants in
the National Electricity Market (NEM) and South-West Interconnected
System (SWIS) in Australia. He is interested in solar technologies and their
integration intoelectricity grids.
Dr. Gilmore has a bachelor of science and a PhD in physics from the
University ofQueensland,Australia.
Jean-Michel Glachant is director of the Florence School of Regulation
and holder of the Loyola de Palacio Chair. He is a research partner of
CEEPR (MIT, USA), EPRG (Cambridge University, UK); chief editor
of Economics of Energy & Environmental Policy, a journal of the
International Association for Energy Economics, and a member of the board
oftheIAEE.
Earlier, he was a professor of economics at La Sorbonne University and
head of the department of economics at the University of Paris-Sud 11.
He has been adviser to DG TREN, DG COMP, DG RESEARCH, and DG
ENERGYof the EuropeanCommission.
Jean-Michel obtained his PhD in economics from La Sorbonne
University, France.
Jose´ Gon˜i is a professor at the Universidad de Concepcio´n. His extensive
diplomatic carrier including being ambassador in Sweden, Italy, Mexico, and
the United States, and has represented Chile at FAO and other international
institutions inthe UN system. He has also servedas Minister of Defense.
Hisacademic,teaching,writing,andspeakinginterestsarediverseinclud-
ing a number of teaching and speaking engagements at universities and
researchinstitutionsaroundtheworld.Mr.Gon˜ihaseditedseveral booksand
has published articles on economic, social, and political issues notably “Olof
Palme y Ame´rica Latina,” edit.Nueva Sociedad, Caracas (1986); “Desarrollo
conequidad”,editorialAzul,Montevideo(1989);“200years”onUSA(cid:1)Chile
bilateral relationships (2010); and articles in newspapers and other publica-
tions.Healsowritesshortstoriesandisworkingonanovel.
He has bachelor and business engineering degrees from Universidad de
Concepcio´n.
Mika Goto is a senior research economist at Central Research Institute
of Electric Power Industry (CRIEPI), where she is engaged in a wide range
of projects including performance assessment and empirical analysis of
industrial organization of electric utilities using applied econometrics and
mathematical programming.
Dr. Goto’s research interests include regulatory reform. She has published
papersinregulatoryreformofenergyindustries,R&Dpolicy,andmanagement.
