{"title":"Unlocking market secrets: Revealing wholesale electricity market price dynamics with a novel application of spectrum analysis","authors":"Martin J. Maticka , Thair S. Mahmoud","doi":"10.1016/j.tej.2023.107330","DOIUrl":null,"url":null,"abstract":"<div><p>Understanding market participants' competitive behaviour is essential for optimising financial performance in liberalised electricity markets. However, this is challenging due to complex market structures, generation dependent on different primary energy sources and lack of transparency. This paper introduces a novel approach using power spectrum analysis applied to wholesale electricity markets to uncover hidden patterns. Applying this novel method to the Western Australian Wholesale Electricity Market (WEM) revealed periodic cycles in different fuel types and technologies that offered insights into competitor behaviour not immediately evident in the dataset. Surprisingly, the approach uncovered that in a power system with high penetration of renewable generation, there is a weak price response to demand changes, challenging assumptions about the direct link between demand and price formation. These insights could be applied gain a competitive edge in capital investment decisions and tactical bidding behaviour.</p></div>","PeriodicalId":35642,"journal":{"name":"Electricity Journal","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Electricity Journal","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1040619023000970","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"Social Sciences","Score":null,"Total":0}
引用次数: 0
Abstract
Understanding market participants' competitive behaviour is essential for optimising financial performance in liberalised electricity markets. However, this is challenging due to complex market structures, generation dependent on different primary energy sources and lack of transparency. This paper introduces a novel approach using power spectrum analysis applied to wholesale electricity markets to uncover hidden patterns. Applying this novel method to the Western Australian Wholesale Electricity Market (WEM) revealed periodic cycles in different fuel types and technologies that offered insights into competitor behaviour not immediately evident in the dataset. Surprisingly, the approach uncovered that in a power system with high penetration of renewable generation, there is a weak price response to demand changes, challenging assumptions about the direct link between demand and price formation. These insights could be applied gain a competitive edge in capital investment decisions and tactical bidding behaviour.
Electricity JournalBusiness, Management and Accounting-Business and International Management
CiteScore
5.80
自引率
0.00%
发文量
95
审稿时长
31 days
期刊介绍：
The Electricity Journal is the leading journal in electric power policy. The journal deals primarily with fuel diversity and the energy mix needed for optimal energy market performance, and therefore covers the full spectrum of energy, from coal, nuclear, natural gas and oil, to renewable energy sources including hydro, solar, geothermal and wind power. Recently, the journal has been publishing in emerging areas including energy storage, microgrid strategies, dynamic pricing, cyber security, climate change, cap and trade, distributed generation, net metering, transmission and generation market dynamics. The Electricity Journal aims to bring together the most thoughtful and influential thinkers globally from across industry, practitioners, government, policymakers and academia. The Editorial Advisory Board is comprised of electric industry thought leaders who have served as regulators, consultants, litigators, and market advocates. Their collective experience helps ensure that the most relevant and thought-provoking issues are presented to our readers, and helps navigate the emerging shape and design of the electricity/energy industry.
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