THE THEORETICAL JUSTIFICATION OF LIBERALIZATION MECHANISM COMPONENTS IN THE WHOLESALE ELECTRICITY MARKET
Journal Title: Проблеми системного підходу в економіці - Year 2018, Vol 1, Issue 63
Abstract
The electricity market is simultaneously a commodity market and a service market, and laws of competition may and must be subject to it. In the article, the liberalization mechanism components in the wholesale electricity market are determined, which are consisting of its restructuring, trade an electricity as a commodity, trading rights to throughput capacity and electricity generation capacity. Restructuring involves the unbundling of certain types of existing vertically integrated energy company activities in order to prevent consumers from being discriminated, overcoming entry and access barriers to network infrastructure access. Vertical restructuring involves the vertical unbundling of various elements of the circuit of electricity. Horizontal restructuring relates only to the electricity generation segment and provides for the creation of an adequate number of competing participants in the electricity market to prevent the market power of monopolist under suppliers and consumers. The electricity markets design means identifying its organizational forms that facilitate the functioning of the market. Their evolution in the world testifies to their gradual transition to more advanced organizational models: from a regulated monopoly to an energy pool, and then to a competitive wholesale market. The highest degree of liberalization is achieved when competition is opened at the retail level. Market mechanisms of the wholesale electricity trade as a commodity provide for defining the timescale segments of the electricity market that include futures, forward or spot trading. Market mechanisms of the throughput rights trading are based on two main approaches to the allocation of limited throughput: explicit and implicit auctions of trading power through the electricity grids. In the first case, the throughput is traded separately from the electricity as a commodity, whereas in the second case, electricity and throughput capacity rights are traded together. Market mechanisms of power capacities trading include various mechanisms of remuneration to electricity producers for workable, but not involved in electricity generating, power capacities in the current market situation. These liberalization mechanism components should ensure in the wholesale electricity market a transition from regulated to competitive pricing; the optimum level of capacity loading in the power system, integration of the relevant markets of neighbouring countries.
Authors and Affiliations
T. I. Salashenko
Keywords
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