The impact of potential-based physics models on pricing in energy networks

Lars Schewe, Martin Schmidt

Research output: Contribution to journalArticlepeer-review

Abstract

Pricing of access to energy networks is an important issue in liberalized energy sectors because of the natural monopoly character of the underlying transport infrastructures. We introduce a general pricing framework for potential-based energy flows in arbitrarily structured transport networks. In different specifications of our general pricing model we discuss first- and second-best pricing results and compare different pricing outcomes of potential-free and potential-based energy flow models. Our results show that considering nonlinear laws of physics leads to significantly different pricing results on networks and that these differences can only be seen in sufficiently complex, e.g., cyclic, networks as they can be found in real-world situations.

Original languageEnglish
Pages (from-to)1003–1029
Number of pages27
JournalCentral European Journal of Operations Research
Volume28
Early online date13 Mar 2019
DOIs
Publication statusPublished - 30 Sep 2020

Keywords

  • Electricity networks
  • Energy networks
  • Gas networks
  • Pricing

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