Template-Type: ReDIF-Article 1.0
Author-Name:  Álvaro Riascos, Miguel Bernal, Luciano de Castro and Shmuel Oren
Title:  Transition to Centralized Unit Commitment An Econometric Analysis of Colombia's Experience
Classification-JEL: F0
Volume:  Volume 37
Issue:  Number 3
Year:  2016
Abstract:  This paper attempts to shed light on the relative merits of centralized electricity markets with multipart bids and dispatch using an MIP-based unit commitment optimization approach vs. self-committed markets with linear energy supply curves. We conduct an empirical study of data from the Colombian market, which in 2009 transitioned from a self-commitment paradigm to a centralized unit commitment approach where generators offer a linear supply function for energy along with start-up costs while the commitment and dispatch are determined by the system operator using MIP-based optimization. The results indicate that the transition to centralized dispatch has resulted in productive efficiency gains through a decrease in production costs. However, these gains have not translated into wholesale price decreases; in fact, wholesale prices increased after the change in the dispatch approach. These results suggest that productive efficiency gains have been captured by suppliers through the exercise of market power. 
Handle: RePEc:aen:journl:ej37-3-Oren
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=2785
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