Course 03 of 20 · Power and Electricity Desk Academy

Market Designs & Price Formation

Stage A, Electricity foundations. Level 2 of 10.

How a given market design clears a price and what that clearing price does and does not represent.

118 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 01, Course 02

Enrol or enquire See the 118 chapters
How a chapter is sized

One chapter is one idea taken to the point of use

Each chapter is a single self-contained explainer of 8 to 10 narrated minutes, covering one idea to the point where you can use it.

Chapters run in order. Each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 118 chapters

Open any module for its full chapter list, in teaching order.

M0 The Design Question Before Any Price Ch 1-10
  1. Electricity Will Not Wait to Be Priced
  2. Three Jobs Every Electricity Market Must Do
  3. A Design Is a Set of Deliberate Choices
  4. Why a Grid Operator Sits Inside the Trade
  5. The Product a Power Market Actually Sells
  6. Where Power Trading Happened Before Markets
  7. What Liberalisation Did and Did Not Change
  8. Why the Same Fundamentals Clear Two Prices
  9. Vocabulary a Design Argument Requires
  10. The Comparison Frame This Course Builds
M1 The Clearing Mechanism Itself Ch 11-21
  1. Offers and Bids as Step Functions
  2. Where the Two Curves Cross
  3. The Marginal Unit and Why It Sets the Number
  4. Uniform Pricing Stated Precisely
  5. Inframarginal Rent and Who Earns It
  6. Demand That Does Not Respond to Price
  7. Demand-Side Bids and the Elastic Segment
  8. A Single Hour Cleared by Hand, Part One: Building the Stack
  9. A Single Hour Cleared by Hand, Part Two: Reading the Result
  10. Vertical Supply and the Price That Runs Away
  11. The Clearing Price as a Shadow Value
M2 Pricing Rules and What They Reward Ch 22-31
  1. Pay-as-Cleared Against Pay-as-Bid
  2. What a Generator Offers Under Each Rule
  3. Why Discriminatory Pricing Rarely Pays Less
  4. Bidding Variable Cost and When It Is Rational
  5. Offer Strategy a Uniform Auction Invites
  6. The Same Stack Settled Two Ways
  7. Average and Weighted-Average Settlement Designs
  8. Hybrid Rules and the Partial Pay-as-Bid
  9. Who Bears the Cost of a Rule Change
  10. What a Pricing Rule Cannot Fix
M3 Order Types the Design Permits Ch 32-43
  1. The Order Type Every Design Accepts
  2. Block Orders and the All-or-Nothing Condition
  3. Linked and Exclusive Block Families
  4. Profile Blocks and Shaped Submissions
  5. Complex Orders With a Minimum Income Condition
  6. Three-Part Offers: Energy, Start-Up and No-Load
  7. Declared Technical Constraints
  8. Ramp Rates Submitted as Commercial Terms
  9. Minimum Run and Minimum Down Times in a Submission
  10. Self-Schedules and the Price-Taking Submission
  11. Submitting Below Zero and What the Rules Allow
  12. What Richer Order Types Do to the Price
M4 Non-Convexity and the Price That Will Not Hold Ch 44-54
  1. Lumpy Plant and the Problem It Creates
  2. Unit Commitment Against Economic Dispatch
  3. When the Price Will Not Support the Schedule
  4. Paradoxically Rejected Blocks
  5. Paradoxically Accepted Blocks and the Loss Taken
  6. Make-Whole Payments and Uplift
  7. Convex Hull and Extended Marginal Pricing
  8. Who Pays the Uplift, and How It Is Spread
  9. One Commitment Decision Priced Two Ways
  10. The Share of Value Settled Outside the Price
  11. Reading a Figure That Needed a Side Payment
M5 Design Families Compared Ch 55-66
  1. Central Dispatch Designs
  2. Self-Dispatch Designs
  3. Central and Self Dispatch Side by Side
  4. Energy-Only Designs
  5. Designs With a Capacity Obligation Attached
  6. Gross Pool and Net Pool
  7. Mandatory Pools Against Voluntary Exchanges
  8. Zonal Price Formation
  9. Nodal Price Formation Introduced
  10. Single-Buyer and Administered Arrangements
  11. Security-Constrained Clearing
  12. Placing an Unfamiliar Design on the Frame
M6 The Sequence of Markets and Which Price Is Which Ch 67-77
  1. The Timeline From Forward to Real Time
  2. Why Sequential Markets Produce Sequential Figures
  3. Gate Closure and the Point of No Return
  4. The Day-Ahead Auction's Place in the Sequence
  5. Continuous Intraday Trading Against Intraday Auctions
  6. Real-Time and Balancing Price Formation
  7. Co-Optimised Energy and Reserve Clearing
  8. Convergence Between Stages and What Breaks It
  9. Which Figure Settles Which Obligation
  10. Four Figures for One Hour, Reconciled
  11. The Settlement Interval and Its Mismatch With the Trade
M7 Caps, Floors and Administered Boundaries Ch 78-87
  1. Technical Price Limits and Why They Exist
  2. A Cap That Binds and the Information It Hides
  3. The Floor, Zero and the Bottom of the Book
  4. Administered Shortage Pricing and Scarcity Adders
  5. The Missing Money Argument Stated Fairly
  6. Emergency Actions and the Suppressed Figure
  7. Out-of-Market Instructions and Their Hidden Cost
  8. Price Formation During a Reliability Intervention
  9. Cap Escalation Rules and Automatic Adjustment
  10. What a Bounded Figure Fails to Signal
M8 Reading a Clearing Outcome Ch 88-98
  1. The Published Results Set
  2. Aggregate Curves as Published Evidence
  3. Identifying the Technology That Set the Level
  4. The Curtailed and Unmatched Volume Report
  5. Cleared Volume Against Actual Consumption
  6. A Session With a Near-Vertical Stack
  7. A Session Cleared on the Purchase Side
  8. A Surprising Outcome Taken Apart, Part One: The Candidates
  9. A Surprising Outcome Taken Apart, Part Two: The Verdict
  10. Market Monitoring Reports as a Reading Source
  11. What the Published Data Will Not Tell You
M9 What a Cleared Figure Represents Ch 99-109
  1. Marginal, Not Average
  2. One Product, One Interval, One Location
  3. A Cleared Figure Is Not a Forecast
  4. A Cleared Figure Is Not a Cost-Recovery Statement
  5. Inferring Generator Profit, and Why It Fails
  6. Inferring Consumer Cost, and Why It Fails
  7. What the Figure Says About the Marginal Unit Only
  8. Scarcity, Surplus and What the Number Shows
  9. Comparing Figures Across Two Designs Honestly
  10. A Misread Number and the Position It Justified
  11. Questions to Ask Before Trusting a Printed Number
M10 One Afternoon, Two Designs, and the Limits Ch 110-118
  1. The Worked Situation Set Up
  2. Clearing It Under a Self-Dispatch Zonal Design
  3. Clearing It Under a Central Dispatch Design
  4. Why the Two Numbers Differ
  5. Explaining the Gap to a Trading Desk
  6. The Same Afternoon With One Plant Removed
  7. The Design Facts a Position Depends On
  8. What Design Analysis Cannot Predict
  9. What This Course Deliberately Left to Others

The brochure gives each of these 118 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 3 of twenty

It stands alone, and it is also the entry point to the Power and Electricity Desk Academy pathway.

Enrol or enquire See the whole pathway