Electricity market basics

Slides [link]

Key Points

To help reinforce the concepts discussed last week, this week we’re going to be playing the Stanford Energy Market Game. This game simulates the California electricity market.

Before class, please take a look at the about page and player tutorial. I will send additional instructions via email.

Required reading and response questions

Lecture 1

Response questions:

  1. How do generators make money in a uniform price auction like the one described in the last video? Do you think power plants make more money if they bid their true costs or if the bid higher or lower? Response should one paragraph. Don’t worry if you don’t “know” the answer, just try to reason through it.

Lecture 2

Response questions:

  1. What are the channels through which a tax on carbon emissions from electric generators reduces carbon emissions?
  2. Which channel do you think will be most important (ie will result in the biggest drop in emissions)?

Additional material