Joint Advanced Doctoral Degree in Energy Systems - JADES

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Kurs 4 - Tržište energijom i zakonodavstvo

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Module Code:



The students enrolled in Markets and Regulation must have been approved in disciplines covering the following subjects: steady state power system operation, traditional Optimal Power Flow methodologies and algorithms and about general topics on Electricity Markets. Apart from that, they should also have knowledge about Operations Research, namely on duality concepts and their economic interpretation.

Lecture hours: 15

Tutorial hours: 6

Laboratory/Coursework hours: 9

Other (specify):


The course on Markets and Regulation aims at analyzing the issues faced by firms and regulators in the new liberalized electricity markets. This involves analyzing the most relevant models that have been used to form the new skeleton of power systems: unbundling of the integrated tariff systems in order to create additive non-biased systems; regulation and regulatory approaches; nodal marginal pricing; equilibrium models for energy pricing and investment analysis; futures markets and the use of real options for pricing electricity and evaluating generation plants.
An important objective of this course is to contribute to develop the capacity of the students to work autonomously, to do bibliographic research, to prepare written reports and to deliver oral presentations.


The contents of the course on Markets and Regulation include the following topics:

  • analysis of the models and structures resulting from the adoption of market mechanisms in the electricity sector. In this scope, they will be revised the basic concepts of wholesale and retail, the ISO/TSO and Market Operator, it will be discussed the pay-as-bid versus uniform price auction, simple bids versus complex bids, bilateral physical and financial contracts, congestion and ways to address it;

  • this study will be complemented and illustrated by analyzing the EU Directives on the Internal Electricity Market and the structure and operation results in some countries or geographical areas as Spain, the Nordpool, and Britain;

  • access tariffs as a crucial element for the success of electricity market implementations. Tariff approaches with particular emphasis on nodal pricing, calculation models and congestion rent. The Portuguese transmission network will be used to illustrate these concepts, the advantages and the drawbacks of nodal pricing;

  • the scheduling of ancillary services in this new structure. Discussion on the unbundling of ancillary services from active power: basic concepts and problems. Implementation of particular markets for some ancillary services and analysis of the situation in some countries. In this scope, it will be given particular emphasis to voltage control/reactive power;

  • the concept of regulation, and its historical evolution. Regulatory strategies: Cost-Of-Service/Rate of Return, and Incentives approaches, including Price Caps, Revenue Caps and Benchmark Regulation. The regulation of transmission and distribution wiring activities in some countries. The Portuguese tariff system will be used as an example of an unbiased additive system. In this scope, they will be referred the regulated activities, the corresponding tariffs, costs and adopted regulated strategies, the composition of basic tariffs to construct access tariffs and the incentives to improve Quality of Service and the more effective operation of networks included in this system. It will also be analysed the answer of regulated wiring companies to the signals transmitted by the Regulatory Board, namely in terms of some Quality of Service indices;

Directed reading (state if material provided):

Staff involved
Module leader: Prof. F. M. Barbosa

Other staff:
Prof. J. T. Saraiva

Date of last revision:

21 April 2008