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