Market Design in Energy and Communications Peter Cramton Professor - - PowerPoint PPT Presentation
Market Design in Energy and Communications Peter Cramton Professor of Economics, University of Maryland www.cramton.umd.edu 15 December 2014 1 Market design Establishes rules of market interaction Economic engineering Economics
Peter Cramton
Professor of Economics, University of Maryland www.cramton.umd.edu 15 December 2014
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– Economics – Computer science – Engineering, operations research
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Market design accomplishments
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– Least-cost operation of existing resources
– Right quantity and mix of resources
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Challenges of electricity markets
at every instant at every location
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– Spot energy market
– Bilateral contracts – Forward energy market
– Capacity market (thermal system) – Firm energy market (hydro system)
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– Energy during scarcity period (capacity)
– Technology neutral where possible – Separate zones only as needed in response to binding constraints
risk
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– Obligation to supply during scarcity events
– Contract defaults – Unreliable resources
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complements
– Make best use of scarce spectrum – Address competition issues in downstream market
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– Product design – Auction design
– Dynamic price process to focus valuation efforts
– Pricing rule – Activity rule
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Italy 4G Auction, September 2010 470 rounds, €3.95 billion
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US AWS-3 auction, 65 MHz, after 91 rounds $43.7 billion, $2.65/MHzPop (paired)
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The future…as with electricity: multiple opportunities to contract
– One day – One hour – 5 minutes – 4 seconds – (10 milliseconds, 10 microseconds, …?)
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– Simultaneous ascending clock
– Combinatorial clock
– Two-sided clock
– Encourage participation – Demand performance – Avoid collusion and corruption
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