An International Comparison of Electricity Liberalization: A focus on the real-time adjustment mechanism

Author Name HATTA Tatsuo  (Faculty Fellow, RIETI) /MIKI Yosuke  (Center for Policy Study and Analysis, Japan Association of Corporate Executives)
Creation Date/NO. November 2013 13-J-075
Research Project An International Comparative Study of Power Supply Liberalization
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A drastic reform of the power system is about to take place in Japan. The most significant improvement to be introduced is the "market mechanism in the real-time power adjustment of supply and demand," which consists of a bidding system of power adjustment and an imbalance settlement system. Buyers and seller of power can sense the degree of tightness of the market through the level of the imbalance settlement price, which is formed through the bidding systems. Thus, these systems are effective in order to reduce the divergence of supply and demand.

Nordic countries and Germany have introduced these systems through liberalizing their power industries. In the present study, we shed light on the following points by studying the market institutions of these countries in the hope of contributing to the system reform of Japan:

(1) bidding methods of power adjustment and reserve
(2) systems of imbalance settlement
(3) cooperation among transmission system operators (TSOs)
(4) functions of balance-responsible companies in the real-time markets of each country
(5) methods of eliminating congestion in the interconnections between countries