Zonal Pricing in Kazakhstan Power System with a Unit Commitment Model

Abstract

Developing economies are in process of liberalizing their electricity markets, following similar process in developed economics. This process aims at establishing liquid energy exchanges that provide clear price signals, providing indications on the profitability of different operations: production, retail, trading in interconnections. This paper aims at developing a unit commitment model for examining zonal market pricing in Kazakhstan. The latter has an extensive landscape but sparsely populated, while is also characterized by the high availability of domestic fossil fuels, but located in different sub-regions of the country. The provision of zonal price signals in such a power system in invaluable, as it enables the provision of clear price signals on the needed infrastructure and the estimation of the zonal hourly energy and technology mix. Moreover, in enables the formation of dynamic bidding strategies by market participants in cases with favourable conditions, such as the implementation of scarcity pricing. This paper presents a unit commitment model that used to assess different bidding strategies and to provide zonal price signals. The strategies are formed, depending on the technology type and fuel prices comparison. Results provide clear signals on needed infrastructure among zones in Kazakhstan. It also shows that dynamic biding can lead to market coupling. Finally, it indicates the importance of institutional capability to monitor bidding strategies, eliminating speculation.Keywords: Electricity markets, unit commitment model, KazakhstanJEL Classifications: Q4, Q47, L94DOI: https://doi.org/10.32479/ijeep.9022