Economics of power markets

The course is not on the list Without time-table
Code Completion Credits Range Language
XP16EPM ZK 4 2P+4D Czech
Department of Economics, Management and Humanities

The subject provides basic theoretical knowledge about the organization and functioning of electricity markets. The starting point is the theory of short- and long-term marginal costs and the generation of the electricity supply curve. This is followed by the theory of integration of electricity markets and the creation of economic welfare (social welfare). Current trends in power generation tend to decarbonise and integrate electricity markets. This, together with the massive rise in electricity from intermittent sources, leads to the need for a new constitution of electricity markets and new business models including demand response and the development of the prosumers concept (where end consumers of electricity are also electricity generators). Part of the subject is also discussion of other links of the electricity market - emission allowances, connection to the heat market and other commodity markets.

Syllabus of lectures:

1. Power market liberalization

2. Pan European power market, EU energy strategy

3. Short term and long term marginal cost of power generation, principles of power price determination, merit order effect

4. Power market functioning, market coupling versus market splitting, re-dispatch, social welfare

5. Power supply curve - energy only market, capacity market

6. Long term contracts – price modelling and price forecast

7. Balancing markets, bids, tendering

8. Regulated and unregulated segments of the power market – principles and functioning, unbundling

9. New power market design, decentralization

10. Demand response, switch from consumers to prosumers

11. Combined heat and power – principles of pricing

12. Trade with emission allowances

13. Power market and links to other energy commodities markets

14. Reserve

Syllabus of tutorials:
Study Objective:
Study materials:


1. Darryl R. Biggar,‎ Mohammad Reza Hesamzadeh: The Economics of Electricity Markets.Wiley, 2014, ISBN-13: 978-1118775752

2. Deqiang Gan, Donghan Feng, Jun Xie: Electricity Markets and Power System Economics, CRC Press, 2013, ISBN 9781466501690


3. Bent Sørensen: Renewable Energy: Physics, Engineering, Environmental Impacts, Economics and Planning. Academic Press, 2010, ISBN 978-0-12-375025-9

Further information:
No time-table has been prepared for this course
The course is a part of the following study plans:
Data valid to 2022-08-18
For updated information see http://bilakniha.cvut.cz/en/predmet6031906.html