Finding Opportunity in Economic Dispatch: Saving Fuels Without Impacting Retail Electricity Prices

  • Focus Area Electricity Sector Transition
  • Type Discussion paper
  • Date 17 March 2024
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Abstract

For important domestic public policy reasons, many oil- and natural-gas-producing countries allocate fuels to their electricity sector at administratively set prices that are below fuel opportunity costs. This article shows that dispatching power units based on fuel opportunity costs can significantly increase efficiency, while, for political reasons, end users’ electricity prices can continue to be defined based on administratively set fuel prices. In addition, opportunity cost dispatch can bring about environmental benefits when it results in switching the priority levels of oil and gas units in the merit order. This work also resolves the electricity trading dilemma since countries do not want to export electricity based on domestic prices.

Authors

Marie Petitet

Marie Petitet

Research Lead Marie joined KAPSARC in 2021 as a research lead in the Utilities and Renewables program. Her current research focuses on…

Marie joined KAPSARC in 2021 as a research lead in the Utilities and Renewables program. Her current research focuses on power system modeling, market designs for energy transitions and framework analysis for reliable and resilient power systems.
Prior to joining KAPSARC, Marie worked as a research engineer within the Research and Development unit of the utility group EDF in Paris, France. During her EDF journey, she worked on long-term and short-term electricity market design, European transmission grids, and smart charging opportunities for electric vehicles. Marie also worked as a researcher within the market department of the French transmission system operator, RTE.
Marie holds a Ph.D. in Economics from Dauphine University, PSL (France), an M.Sc. in Environmental and Energy Economics from École des Ponts ParisTech (France), and an M.Sc. in Engineering from ENSTA Institut Polytechnique de Paris (France).

Expertise

  • Electricity Markets
  • Energy Transition
  • Energy and Climate Policy
  • Renewables
  • Reliability and Resiliency of Power Systems
  • Power Systems Modeling

Publications See all Marie Petitet’s publications

Frank Felder

Frank Felder

Visiting Researcher Frank is an engineer, energy policy analyst, and a visiting researcher at KAPSARC. Prior to joining KAPSARC, Frank was a… Frank is an engineer, energy policy analyst, and a visiting researcher at KAPSARC. Prior to joining KAPSARC, Frank was a Research Professor at the School of Planning and Public Policy at Rutgers University, Director of the Rutgers Energy Institute, and Director of the Center for Energy, Economics and Environmental Policy. In those roles, he conducted original and applied research in the areas of electric power system modeling, clean energy policies, and climate change for academic foundations, government agencies, and energy utilities. He has also worked as an economic consultant and nuclear engineer.

Expertise

  • Energy Policy
  • Electricity Restructuring and Energy Modeling

Publications See all Frank Felder’s publications

Amro Elshurafa

Amro Elshurafa

Acting Program Director Dr. Elshurafa is a Fellow in King Abdullah Petroleum Studies and Research Center (KAPSARC), Riyadh, Saudi Arabia, and possesses 20+…

Dr. Elshurafa is a Fellow in King Abdullah Petroleum Studies and Research Center (KAPSARC), Riyadh, Saudi Arabia, and possesses 20+ years of experience in energy and technology garnered on three continents. His research interests lie in renewable energy policy, power systems modeling, and hybrid microgrid design and optimization. He has led and executed several national modeling initiatives both at the distributed and utility scales, and he is listed among the top 2% of scientists globally as per Elsevier. Some aspects of his research have been adopted by BP in creating their seminal annual statistical review. Credited with 50+ papers and patents, Dr. Elshurafa holds a PhD in electrical engineering complemented thereafter with an MBA in finance.

Expertise

  • Power sector modeling
  • Electricity markets
  • Renewable energy policy
  • Hybrid microgrid optimization

Publications See all Amro Elshurafa’s publications

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