This volume explores how Texas's groundbreaking program of electricity restructuring has become a model for truly competitive energy markets in the United States. The authors contend that restructuring in Texas has been successful because the industry is free from federal over...

Innovation Dynamics and Policy in the Energy Sector discusses the process and future of global innovation in the energy sector based on the innovation leadership example of Texas. The book proposes that the positive dynamics of Texas energy sector innovations arises from a confluence of factors, including supportive institutions, the management of technological change, competitive markets, astute public policy, intraindustrial collaboration, a cultural focus on change and risk-taking, and natural resource abundance. Heavily case-study focused chapters review the fundamental drivers of innovation, from key discoveries at Spindletop; the proliferation of oil production through major field development; through electric sector deregulation; and recent innovation in hydraulic fracking, renewable integration, and carbon capture. The work closes to argue that sustainable global innovation addressing the twin challenges of climate change and the energy transition must be driven by the promotion of competition and risk-taking which continually promotes the development of ideas, a process jointly funded by the public and private sectors and supported by collaborative and competitive institutions. - Reviews the fundamental drivers of energy innovation and examines each driver through 10 key episodes in the Texas energy innovation experience, inclusive of guidance to the international research community based on their example. - Establishes the critical impact of constructive energy policy, energy technology, and power markets in cultural settings that invite change and risk-taking and proposes them as key factors in building sustainable innovation. - Consolidates current research and practice related to innovation from the perspectives of established (economics and engineering) and emergent (innovation economics and econometrics) disciplines.

Modem industrial society functions with the expectation that electricity will be available when required. By law, electric utilities have the obligation to provide electricity to customers in a "safe and adequate" manner. In exchange for this obligation, utilities are granted a monopoly right to provide electricity to customers within well-defmed service territories. However, utilities are not unfettered in their monopoly power; public utility commissions regulate the relationship between a utility and its customers and limit profits to a "fair rate of return on invested capital. " From its inception through the late 1970s, the electric utility industry's opera tional paradigm was to continue marketing electricity to customers and to build power plants to meet customer needs. This growth was facilitated by a U. S. energy policy predicated upon the assumption that sustained electric growth was causally linked to social welfare (Lovins, 1977). The electric utility industry is now in transition from a vertically integrated monopoly to a more competitive market. Of the three primary components (generation, transmission, and distribution) of the traditional vertically integrated monopoly, generation is leading this transformation. The desired outcome is a more efficient market for the provision of electric service, ultimately resulting in lower costs to customers. This book focuses on impediments to this transformation. In partiCUlar, it argues that information control is a form of market power that inhibits the evolution of the market. The analysis is presented within the context of the transformation of the U. S.

The writing of this book was largely motivated by the ongoing unprecedented world-wide restructuring of the power industry. This move away from the traditional monopolies and toward greater competition, in the form of increased numbers of independent power producers and an unbundling of the main services that were until now provided by the utilities, has been building up for over a decade. This change was driven by the large disparities in electricity tariffs across regions, by technological developments that make it possible for small producers to compete with large ones, and by a widely held belief that competition will be beneficial in a broad sense. All of this together with the political will to push through the necessary legislative reforms has created a climate conducive to restructuring in the electric power industry. Consequently, since the beginning of this decade dramatic changes have taken place in an ever-increasing list of nations, from the pioneering moves in the United Kingdom, Chile and Scandinavia, to today's highly fluid power industry throughout North and South America, as well as in the European Community. The drive to restructure and take advantage of the potential economic benefits has, in our view, forced the industry to take actions and make choices at a hurried pace, without the usual deliberation and thorough analysis of possible implications. We must admit that to speak of "the industry" at this juncture is perhaps disingenuous, even misleading.

Decision Making Under Uncertainty in Electricity Markets provides models and procedures to be used by electricity market agents to make informed decisions under uncertainty. These procedures rely on well established stochastic programming models, which make them efficient and robust. Particularly, these techniques allow electricity producers to derive offering strategies for the pool and contracting decisions in the futures market. Retailers use these techniques to derive selling prices to clients and energy procurement strategies through the pool, the futures market and bilateral contracting. Using the proposed models, consumers can derive the best energy procurement strategies using the available trading floors. The market operator can use the techniques proposed in this book to clear simultaneously energy and reserve markets promoting efficiency and equity. The techniques described in this book are of interest for professionals working on energy markets, and for graduate students in power engineering, applied mathematics, applied economics, and operations research.