This is an assignment for my Electricity Markets course. I will provide the related powerpoint slides and the assignment’s outline. Please have the assignment finished by Monday June 11th before 4 p.m. EST.
Due Monday June 4, 2018 by 6:00pm. May be submitted in person at the start of class or by email to [email protected]
1. You have been hired to analyze the electricity market on the newly inhabited island of Paradisum. There are m identical households on the island that have a demand for electricity during the day but not during the evenings (they prefer the natural light of the stars). The daytime preferences from consuming electricity for household i is represented by ?(??)=???−???22.
There are n identical producers of electricity in Paradisum. The cost function of producer j is ?(??)=???2+??, where SC is a one-time fixed start-up cost, incurred only when the producer decides to generate electricity.
Both households and suppliers are price takers (i.e., in Paradisum, we have perfect competition in the electricity market).
As the analyst of this electricity market, you are asked to answer the following questions.
a. What is the daytime electricity demand curve for household i for a given price of electricity P?
b. What is the daytime demand curve of the entire market for a given price of electricity P? Supply Side:
c. What is the supply curve for producer j for a given price of electricity P?
d. What is the market supply curve for a given price of electricity P?
e. Provide expressions for the competitive equilibrium daytime price and quantity of electricity as a function of the parameters a, n, m, w and SC.
f. What is the equation for how much each producer j generates as a function of the parameters a, n, m, w and SC?
g. What is the equation for the profit for each producer j as a function of the parameters a, n, m, w and SC?
h. You have learned that a=100, w=$4, SC=$100, n=2 and m=10. Using the equations you derived above, what is the equilibrium market price and quantity? What is the quantity of electricity consumed by household i? What is the amount of electricity generated by producer j? What are the profits of producer j? What is the aggregate consumers’ surplus, producers’ surplus and total surplus?
i. Is this market equilibrium that you have found in h, a short-run or long-run equilibrium? Why? If the firm is not in long-run equilibrium, explain the adjustment process that will occur and derive the long-run equilibrium?
j. A new company, Avarum, purchases the island and appropriates all the generation assets from the individual producers. Avarum will operate industry as a legal monopolist (with one plant as there are no capacity constraints to a plant). What is the new equilibrium price and quantity of electricity? What is Avarum’s producer surplus? What is the consumers’ surplus? Is this equilibrium more or less efficient than the previous competitive equilibrium? If yes, provide a measure of the inefficiency.
2. A load duration curve measures the number of hours per year the total load is at or above any given level of demand. It can be constructed for a given region by measuring the total load at hourly intervals for each of the hours in a year (typically 8760), sorting them, and graphing them starting from the highest load. The result is a curve that slopes downward from the maximum load in the peak hour, hour 1, to the minimum load, baseload, in the most off-peak hour (See Figure 1-4.1, page 42 of Stoft).
Hourly Ontario demand can be found at the IESO website http://reports.ieso.ca/public/Demand/ and hourly Alberta demand can be found at the AESO website http://ets.aeso.ca/ (hint Select Report called Pool Price).
a. Using the data found on the above websites, create load duration curves for each province for the years 2007 and 2017 (each province may be represented on a separate graph).
b. Describe some of the key trends in demand for each province (i.e., what has happen to demand over the ten years in terms of peak demand growth, peak demand vs baseload demand variation, other)?
c. A jurisdiction’s annual load factor is equal to the ratio of the annual average hourly demand to annual hourly peak demand. Calculate the annual load factor
for each province. What might the differences between the load factors for each province suggest about the nature of electricity consumption in each market?
d. For each province, in what season did the peak demands occur? What might this suggest about the relative weather in each province and the nature of energy consumption?
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Proximity of various messy players and exceptionally gifted MNCs gives savage competition in the market to dispatch various new brands. This gives broad assortment of determination of brands for the customers. PORTER'S FIVE COMPETITIVE FORCES: Buyer POWER: The purchaser base of this industry is greater than some other industry and they have alongside zero impact on the cost of the thing. The buyer constantly has amazing choice of brands inside the thing class and they can move beginning with one then onto the following absent much effect. Along these lines, buyer control isn't precisely strong in this industry. Nevertheless, they have control when they offer hazard to move beginning with one brand then onto the following brand. In FMCG retailers should similarly considered for examination. Retailers can basically pick which brand to stock and customers don't demonstrate much excitement to delay if one brand of choice isn't available. So retailers can essentially settle on choice among brands and they have more buyer control than purchasers. Supplier POWER: Supplier control is practically nothing or limited in the FMCG business. The business constantly has great number of suppliers with exceptional size. There won't be any uniqueness in the thing or organization of suppliers and the maker can basically move from one supplier to other supplier. However creator faces some measure of supplier control due to the cost they have to cause while trading suppliers. Suppliers who do broad business with makers are continually obliged to their customers. Danger OF NEW ENTRANTS: Danger of new competitors is compelled in this industry. The new members generally consider close-by or little markets adding to the significant disordered fragment. Rough materials for by far most of the areas in FMCG industry can be viably gotten. The hypothesis won't be high for device and diverse assets required for most by far of the things in the business. Moreover the major development is adequately available. These segments can make the adjacent or little makes to enter adequately in the business. In any case, this industry requires high early on dispatch cost and assignment sort out is constantly a test. These factors go about as a block for any new members in the business and in every way that really matters give generally safe of new candidates. Peril OF SUBSTITUTES: The FMCG business bears a high peril of substitutes. The business has various made players with unbelievable number of adjacent produces. The things in the business can essentially be imitated and exhibited. The business has unusual state danger of substitutes in nation promote than in the urban. Level OF RIVALRY: The level of rivalry is high in the business. There are various overall players close by neighborhood creators. The business acknowledges low customer constancy. The customers reliably have wide determination of brands and the trading cost is continually minimum or immaterial. There will be simply slight qualification in the idea of brands. So the resistance is wild in the business to attract customers and hold them. Fundamental social affairs in the business: Among the FMCG associations in India Hindustan Unilever Limited is most given sustenance association to generally every segment in the business. Its opponents are simply considered certain areas however HUL faces firm competition from all adversaries in each part. The huge associations of fundamental social events in FMCG industry are Hindustan Unilever Limited, ITC Limited, Nestle India, Emami Limited, Colgate-Palmolive (India) Limited, Dabur India Limited, Procter and Gamble, Godrej Consumer Products Limited and Cadbury India. >GET ANSWER