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Physical and Financial Virtual Power Plants
Bert Willems Center & TILEC, Tilburg University April 2005 Abstract: Regulators in Belgium and the Netherlands use different mechanisms to mitigate generation market power. In Belgium, antitrust authorities oblige the incumbent to sell financial Virtual Power Plants, while in the Netherlands regulators have been discussing the use of physical Virtual Power Plants. This paper uses a numerical game theoretic model to stimulate the behaviour of the generation firms and to compare the effects of both systems on the market power of the generators. It shows that financial Virtual Power Plants are better for society.
Keywords: Futures Markets, Options Markets, Cournot, Market Power, Electricity, Arbitrage JEL Classifications: C72, D43, G13, L13, L94 Working Paper SeriesDate posted: September 27, 2005 ; Last revised: September 29, 2005Suggested CitationContact Information
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