Generation Revenue Enhancement in a Pool-Based Electricity Market with Capacity Payment: A Case Study of Malaysia’s Electricity Supply Industry

Abstract

The objective of this paper it to address the economic benefit in term of generation revenue for Malaysia electricity supply industry (MESI). Pool market model is recognized as a conceivable model to overcome the shortcomings of the single buyer market because this model  is a safe option to be more competitive and transparent electricity supply industry. However, there are issues on the welfare of the generators involved and could invite a lots of rejections from the power producers if it is not properly executed. Therefore, this paper focuses on the pricing issue in pool market by extending the capacity payment mechanism in the single auction power pool in context of MESI. A case study is conducted for two bus test system in involving four generators around Peninsular Malaysiat to illustrate the proposed model which introduce the base load sharing approach and minimum capacity payment involving the efficiency of the generators. An economic analysis is conducted to highlights the merits of the proposed model compared with other pool based market model in term of generation revenue that will help in assisting in new policy setup and further research works to overcome this crisis.