Assessing welfare impact of entry into power market

초록

This paper calculates the welfare impact of a new entrant based on the location of entry in the Korean electricity market. We use two different models. One is the optimal fuel mix model to estimate the effect of a new entry in the long run. The other is the variable cost minimization model to assess the contribution of an existing installed private generator in the short run. A specific private generator, which has a cost advantage, saves a substantial amount of system-wide variable costs. We show that the right location for a new entrant can save power generation costs significantly, even if a new entrant does not have a cost advantage. (C) 2013 Elsevier Ltd. All rights reserved.

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