After the first power plant in history was commissioned for commercial operation by Thomas Edison on Pearl Street in New York in 1882, electricity was sold as a consumer product at market prices. After a period of rapid development, electricity had become such a fundamental product that regulation was believed to be necessary. Since then, the power industry had been considered a natural monopoly and undergone periods of tight regulation. Deregulation started in the early 1980s and as a result, most developed countries run their power industries using a market approach.

With the theories and rules of electricity markets developing rapidly, it is often difficult for beginners to start learning and difficult for those in the field to keep up. Bringing together information previously scattered among various journals and scholarly articles, Electricity Markets and Power System Economics provides a comprehensive overview of the current state of development in the electricity market. It introduces the fundamental principles of power system operation so that even those with a basic understanding can benefit from the book. 　

The book includes a series of consistent mathematical models of market operation of power systems, and original cases with solutions. Systematically describing the basic building blocks of electricity market theory, the book provides a guide to underlying theory and mainstream market rules.

With the theories and rules of electricity markets developing rapidly, it’s difficult for beginners to start learning and difficult for those in the field to keep up. Bringing together information previously scattered among various journals and scholarly articles, this book provides a comprehensive overview of the current state of development in the electricity market. It introduces the fundamental principles of power system operation so that even those with a basic understanding can benefit from the book. It includes a series of consistent mathematical models of market operation of power systems, and original cases with solutions.

1 Introduction 1.1 Demand and Supply 1.2 Market Equilibrium 1.3 Price Elasticity and Competitive Markets 1.4 Economy of Scale and Natural Monopoly 1.5 Brief History of Electricity Markets 2 Fundamentals of Power System Operation 2.1 Economic Dispatch 2.2 Load Flow Calculation 2.3 Load Flow under Outaes 2.4 Fundamentals of Constrained Optimization 2.5 Secutiry-Constrained Economic Dispatch 2.6 Load Frequency Control 2.7 Spinning Reserve 2.8 Generation Scheduling 2.9 Calculation of Trasfer Capabilities of Transmission Interfaces 2.10 Overview of Power System Operation 3 Market Degisn: Spot Energy Market 3.1 Organization after Deregulation 3.2 Uniform Pricing 3.3 Nodal Pricing 3.4 Multiple Block Bidding 3.5 Demand Side Bidding 3.6 Day-Ahead Market 3.7 Ex Post Spot Pricing 3.8 Transmission Losses 3.9 Bilateral Trading in the United Kingdom 3.10 Electricity Market Reform in California 4 Market Design: Procurement of Ancillary Services 4.1 Reserve Market 4.2 AGC Market 4.3 Energy, Reserve, and AGC Co-Optimization Market 4.4 Compensation without Competition 5 Market Design: Common Cost Allocations 5.1 Background 5.2 Transmission costs 5.3 Unit Start-Up Cost 5.4 Peaking Cost Compensation 5.5 Transmission Rights 6 Microeconomic Analysis 6.1 Background 6.2 Fundamentals of Non-Cooperative Game Theory 6.3 Game Models for Market Analysis 6.4 Market Power analysis 6.5 Electricity Market Experiments 7 Pro Forecast and Risk Management 7.1 Forecasting Electricity Prices 7.2 Managing Price Risk through Trading Portfolio Optimization