Vertical separation vs. independent downstream entry in anelectricity network: Experimental insights

Aitor Ciarreta, Enrique Fatas, Nikolaos Georgantzís, Carlos Gutiérrez-Hita
Electric Power Systems Research 143 (2017) 728–738

We analyze a realistic simulation of a complex electricity network. We obtain the data with a series ofexperimental sessions designed to closely replicate the Spanish electricity market. In the experimentsreported here we compare the status quo with two alternative regulatory market structures. In one ofthem, labeled as vertical separation, we impose that power generating firms and electricity distributorsoperate as independent business groups. In the second, we study the effect of entry by independent end-suppliers. Both alternative scenarios dominate the status quo in terms of market efficiency, but the latterof them dominates the former.

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