Electric Power Market

Course Description

Power sector restructuring (organizational structures before and after restructuring). Implementation of classical economic theory on electric power system (liberalization, deregulation, reregulation, privatization). Market different design and organization (wholesale, spot, futures, forward, balancing, bilateral). Electric power market and ancillary systems market. Power Exchange (PX). Auction Types. System operators (minimal and maximal concepts). Costs (marginal, opportunity, stranded, variable, total?). Influence of ancillary services on market i.e. price of electricity. Systems for measurement and accountings in new environment. Mandatory and commercial services. Market power. Transmission congestion as results of market transactions.

General Competencies

Understanding new electric power companies’ structures. Knowledge about System operator role and importance in open market environment. Understanding connection between ancillary services market design and insurance of stabile and secure power system operation.

Learning Outcomes

  1. define most important terms relevant to electricity market
  2. differentiate vertical and horizontal organization of electric power companies
  3. list and describe market, regulated and possible market activities
  4. explain market different design and organization
  5. list market subjects and describe thier role in market environment
  6. describe functioning of ancillary systems market
  7. describe market power
  8. argue influence of congestion on electricity price

Forms of Teaching


Two hours per week.


Continuously: one writing exam, final exam (writing and oral examination) and two short tests. Classical Exam: writing and oral examination at the end of semester. Results of two short tests are included.


One hour per week.


Consulting related to seminar.



Grading Method

Continuous Assessment Exam
Type Threshold Percent of Grade Threshold Percent of Grade
Quizzes 0 % 20 % 0 % 20 %
Mid Term Exam: Written 50 % 30 % 0 %
Final Exam: Written 50 % 30 %
Final Exam: Oral 20 %
Exam: Written 50 % 60 %
Exam: Oral 20 %

Week by Week Schedule

  1. Vertical organization of electric power companies. Unbundling. Stranded costs. Goals and models of restructuring. Horizontal organization.
  2. Regulated activities. Electric power activities leaved to open market regulation (competition). Natural monopoly. Electricity as goods.
  3. Market types. Market different design and organization. Market actors. Electric power market and Ancillary systems market. Historical development of market. Directive 96/92/EC and Directive 2004/54/EC. Electric power market in the World and in the neighboring countries.
  4. Energy activities regulation. Regulatory Body. Regulatory Body obligations.
  5. System operator. Definition and types of System operators (minimal and maximal concepts). Transmission System Operator (TSO). Market System Operator (MSO). Role, importance and obligations of System operator.
  6. Power Exchange (PX). Fundamentals of auction design.
  7. Costs. Definition and role of marginal costs. Opportunity costs and undelivered electric power compensation. Variable costs. Generation costs.
  8. Ancillary services. Definitions and descriptions of Ancillary services. Proposed Ancillary services in some countries in the World (Acording to the FERC Order 888). Ancillary services in Europe. Mandatory and commercial services. Ancillary services costs.
  9. Influence of ancillary services on market i.e. electric power price. Systems for measurement and accountings ancillary services in new conditions. Influence of open electricity market on development and selection meters and electric power consumption registration equipment.
  10. Price of frequency control. Voltage control costs. Costs of operating and supplemental reserve (ready-import, spinning, stand by quick start, stand by slow start). Load following costs. Energy imbalance costs. Black start costs.
  11. Market power. Herfindahl-Hirschman index (HHI). Entropy coefficient (E).
  12. Conditions for network using. Regulated Third Party Access. Charges for access to networks for produces and/or consumers. Tariffs for Transmission and Distribution operators (distribution and transmission fees).
  13. Transmission congestion (botled neck) as result of market transactions. Congestion costs. Transfer capability (already allocated, available and total-TTC). Transfer capacity allocation. Transmission reliability margin (TRM). Inter area and local congestion management.
  14. Regulation No 1228/2003/EC of the European Parliament and of the Council on conditions for access to the network for cross-border exchange in electricity. Exceptions (DC lines). Charging etween Transmission system operators. Longterm average incremental costs.
  15. Development and organization of Croatian electric power market. Current state. Energy Lows. Croatian Energy Regulatory Agency.

Study Programmes

University graduate
Electrical Power Engineering (profile)
Specialization Course (1. semester)


S. Tešnjak, E. Banovac, I. Kuzle (2009.), Tržište električne energije, Graphis, Zagreb, Hrvatska
M. Shahidehpour, M. Alomoush (2001.), Restructured Electrical Power Systems, Marcel Dekker, Inc., New York, USA
S. Stoft (2002.), Power System Economics - Designing Markets for Electricity, IEEE Press/John Wiley&Sons, New York, USA
G. Rothwell, T. Gomez (2003.), Electricity Economics: Regulation and Deregulation, IEEE Press/John Wiley&Sons, New York, USA
B. Murray (1998.), Electricity Markets: Investment, Performance and Analysis, John Wiley&Sons, New York, USA