An options model for electric power markets

The international electric utility industry is undergoing a radical transformation fr om an essentially, regulated and monopolistic industry to an industry made uncertain with impending deregulation and the advent of competitive forces. This paper investigates the development of an options market for bulk power trading in a market setup while considering power system planning and operational constraints and/or requirements. In so doing if considers the different market based financial derivative instruments which can be used to trade electical power in bulk and examines how established tools such as Optimal Power Flow JOPF) may be applied in helping to develop a price for bulk power transactions under a market based setup. Copyright (C) 1996 Elsevier Science Ltd