Journal of Real Options and Strategy
Online ISSN : 1884-1635
Print ISSN : 1881-5774
ISSN-L : 1881-5774
Practice
Valuation of Two Part Tariff Based on Electricity Demand Uncertainty Considering Technology Mix
Naoya MiyaguchiMakoto GotoTakahiro Ohno
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2011 Volume 4 Issue 1 Pages 61-76

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Abstract

The two-part tariff is adopted not only to many contracts for electricity supply but also to those for capacity trading. Previously, the fixed charge in the two-part tariff was thought to cover a part of fixed costs, but now it is getting considered to be a premium for the capacity reservation as the deregulation of the power industry progresses. The two-part tariff which appropriately reflects demand risk is expected to ensure the adequacy of power supply. In this paper, we construct a valuation model for the two-part tariff under power demand uncertainty with considering technology mix which is a set of generators with various fixed cost and variable cost. Further, some new perspectives are provided.

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© 2011 The Japan Association of Real Options and Strategy
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