Dynamic electricity markets - The peak-load pricing model as a control theoretic problem

Economists concentrate usually on equilibria. For the case of the electricity market the long term equilibrium is given by the peak-load pricing model. In contrast control theory has focused on system dynamics, that is how systems are affected by disturbances and shocks and how such situations may be controlled. Therefore rather deviations from system equilibria and ways to counteract those effects are analysed. Concerning uncertain impacts as input factor price changes and load pattern variations the dynamic perspective of control theory might provide a suitable tool for the analysis of electricity markets. Therefore in this paper the peak-load pricing model is translated to a control theoretic problem so that the impact of disturbances and the dynamics of investment activities can be examined.