Impact of a coal power plant closure on a multi-region wholesale electricity market

Abstract

Closure of a base-load power plant, based on either its aging state, or a national greenhouse reduction scheme, or transition to smart grids, may have a significant impact on wholesale electricity markets. This paper presents a Cournot-based multiregion game model based on nonlinear inverse demand functions to formally analyze the impacts of a base-load plant closure on the price level and volatility (increase), and CO2 emission (decrease). Using the Hazelwood coal plant closure in Victoria, a state of Australia's National Electricity Market (NEM), as a case study, the simulation results indicate around 30% and 49% price and volatility increase in the wholesale market, and 210 million AU$..