Pricing Trends in Electric Energy Supply

An electric power price model that permits producers and consumers to operate as a market is presented. Electric power is highly variable in time and cannot be stored from one period to another: it is generated when demanded. Generation technologies (hydraulic, nuclear, thermal, etc.) use different energy sources and have different capacity investment and operating costs. The model minimizes the sum of both costs insuring that producers obtain returns on capacity investment equal to WACC (Weighted Average Cost of Capital).