electricity market concepts
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The Virtual Electricity Market
Application to Congestion Pricing
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An Electricity Market exists to give consumers choice over who generates their electricity
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This means that a residential buyer in Cornwall can actually select a Scottish generator to fulfill
his/her power needs.
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In fact more generally, customers have a choice of both supplier and generator
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Meaning that Regional Electricity Companies (RECs) who were formerly limited in scope to a
specific geographic area
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could now (theoretically) meet the needs of any citizen in any part of the UK
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This was groundbreaking
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It meant that poor service was no longer excusable
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and would result in consequences
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That a REC could not rely on a captive catchment area
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Now think about this - we did this with food and retail markets by liberalising the rules to allow
anyone to sell anything to anyone anywhere
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You buy your groceries from Amazon or Ocado, not just the store nearest to you
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Yet for transport, education and health, we still generally do the captive market thingio
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And it seems that transport underpins the catchment problems of both health and
education
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So let us consider what happens in the electricity markets
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Every morning, the generators put out offers of how much they are selling power for
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The less competitive producers cannot sell as much as the more efficient ones and thus have
to raise their game in order to compete.
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If we had a similar situation for transit, hopefully, smelly, rude, tardy drivers with
clapped-out vehicles
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would not be able to remain in the transport industry for very long
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They would either get better or get eliminated
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And if the consumer insisted on clean air standards
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(or better still - there was a non-trivial cost attached to polluting the air)
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we would see that problem taken care of by market forces
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(read - the cumulative opinions of millions)
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faster and more completely than by the blunt instrument of regulation
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So, what if we had an operator auction off roadspacetime slots every day
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And that people who needed travel bought access to these slots
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Which is what tolling is except that tolls generally do not take into account time of day
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except by discontinuous jumps in price
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And using ideas from Vickrey, we could have variable tolls easily enough
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Which would change the price per seat of any type of vehicle on a particular road at a
particular time
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Making it nonsensical to drive a single occupancy car into a city at peak times
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There wouldn't even be a need to check how many occupants were in the car!
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But you would not care since you could rideshare
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either in your own private car , in a third party's private car
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in a rented (by you or someone else) vehicle
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or in a carpool, vanpool, bus or taxi
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whichever option suited you best at the time
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You would be able to make cost comparisons and even better
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mix and match transit options depending on your circumstance
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Some days, riding with friends would be better
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Others, taking a professional vanpool or carpool
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You could even then calculate a price for letting someone else use your car while you were away,
based on road conditions and demand for transport
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Which would be a statistic available to you
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We would see bus companies using the system able to quote dynamic prices to customers in
addition to changing the schedule of their vehicles to suit their customers
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You would get one price for having a bus come to your front door at a specific time
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and another (hopefully much lower) price for a flexible (for the operator) departure time from a
transit hub
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Freedom To Choose is the whole point here.
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This is what a Transit Exchange
is all about
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Clearly, all of these things won't happen in one step
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Or overnight
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We can start with auctioning seats in buses / taxis and limousines at certain times
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available via SMS, smartphones, iPads and the web
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for certain groups of people
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which means in the early stages, other groups may not immediately see the applicability to
their needs
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but this is merely a marketing and positioning proposition
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not a problem with the business model
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Poco a Poco
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Step by Step
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Then we can move to selling seats in private or rented cars
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trains, private jets, ferries and yachts
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And then the system would allow anyone with a vehicle and the appropriate licence to become a
"producer"
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One final thing to mention is that a transit market has certain characteristics
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which are not dissimilar to electricity markets
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namely constraints of supply
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there is only so much road and only so many vehicles that can fit on that road
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in sparsely populated locales, demand for transport may have a lag time as vehicles will
have to be brought there
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In LMP markets, where constraints exist on a transmission network, there is a need for more expensive generation to be dispatched on the
downstream side of the constraint.
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Prices on either side of the constraint separate giving rise to congestion pricing and constraint
rentals
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A constraint can be caused when a particular branch of a network reaches its thermal limit
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or when a potential overload will occur due to a contingent event (e.g., failure of a generator or transformer or a line outage)
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on another part of the network. The latter is referred to as a security constraint.
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Thus transmission systems (roads) will have to be operated to allow for continuity of supply even if a contingent event, like the loss of a main route, were to occur
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This is known as a security constrained system
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This is known as a
security constrained
system
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