Title: Pricing independent power production

Authors: Aviel Verbruggen

Addresses: University of Antwerp, UFSIA-SESO, Antwerp, Belgium

Abstract: Pricing the electricity traded between independent power producers and the interconnected power grid is a main determinant of the future development of independent generation in a region. Because a kWh varies in value depending on place, time and reliability of its supply, only a full marginal cost pricing system offers a first-best solution. In the real world of average cost pricing, two-part tariffs and transaction costs, a clear catalogue of problems involved and equitable solutions is necessary. Empirical evidence shows that a consensus on general pricing principles is mostly attainable, but that implementation of the principles is a source of severe conflicts. By discussing the Belgian experience in this field, we hope to have contributed in clarifying the subject.

Keywords: cogeneration market; electricity pricing; independent power production; Belgium.

DOI: 10.1504/IJGEI.1990.063706

International Journal of Global Energy Issues, 1990 Vol.2 No.1, pp.41-49

Published online: 19 Jul 2014 *

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