Integrating market and bilateral power trading in the South African Power Pool

Arbeitspapier

High levels of inflexible bilateral trade in southern Africa have limited the participation in the competitive short-term markets, leading to inefficient use of energy infrastructure and blocking the South African Power Pool's long-term goal of transitioning from a cooperative to competitive market. Under the current supply and investment climate, governments and market participants are unlikely to forego their preference for long-term contracts owing to concerns about security of supply and risk mitigation. In this paper, we demonstrate that the current method for integrating bilateral and market trading introduces inefficiencies in the use of generation and transmission infrastructure, reduces total trade, and increases system costs. We propose and test an alternative method based on contracts for differences and implicit auctions to ensure the same level of security of supply for contract holders while minimising market distortions.

Object Details

• ISBN: 978-92-9256-176-5
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIDER Working Paper ; No. 2016/132

Classification and Topics

• Classification: Wirtschaft ; Optimization Techniques; Programming Models; Dynamic Analysis ; Planning Models; Planning Policy ; Energy: General ; Regional Development Planning and Policy
• Subject: bilateral contract ; market design ; power pool

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rose, Amy ; Stoner, Robert ; Pérez-Arriaga, Ignacio
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2016

Further information

• DOI: doi:10.35188/UNU-WIDER/2016/176-5
• Handle: http://hdl.handle.net/10419/161515
• Last update: 10.03.2025, 11:42 AM CET