TERRA ECONOMICUS, , Vol. 16 (no. 2),

This paper focuses on the economic approaches that can be used for improving the functioning of the electricity markets. The combined production of electricity and heat at the combined heat and power (CHP) is the most profitable complex energy supply which ensures the minimum specific fuel consumption and forms the reserve of reduce of electricity tariffs. However, the obligatory participation of the CHP in the trade and economic relations of the wholesale electricity market led to a decrease in their heat load and functioning in low-economic modes with the gradual displacement of their production capacities into the zone of forced generation of electricity. In turn, the increased costs for electricity generation at CHP plants began to be shifted to heat, which caused a decrease in the efficiency of the centralized system of heat supply to consumers and triggered their transition to significantly less efficient low-capacity boiler houses, which caused a significant over-expenditure of fuel in the energy industry. Our paper proposes a structural and organizational solution to this problem, which consists in improving the model of the wholesale and retail electricity markets and the existing trade and economic relations of market entities. The key provision of the proposal is the return of the CHP from the wholesale energy market to the regional electricity markets, which will enable them to regain their positions as the main supplier of heat energy, create conditions for concluding direct contracts between consumers and local power plants, and develop competition in the retail market and build local generating capacities.

Keywords: economic modeling; electricity markets; competitiveness; energy tariffs; consumer demand

  • Brożyna, J., Mentel, G., Szetela, B. and Strielkowski, W. (2018). Multi-seasonality in the TBATS model using demand for electric energy as a case study // Economic Computation & Economic Cybernetics Studies & Research, 52(1), 229–246. DOI: 10.24818/18423264/
  • Energy Bulletin (2018). Cogeneration Prospects. (http://ac.gov.ru/files/publication/a/16709.pdf – Access Date: 04.05.2018).
  • Energy Strategy (2018a). Energy strategy of Russia for the period up to 2030. (https:// minenergo.gov.ru/node/1026 – Access Date: 04.05.2018). Energy Strategy (2018b).
  • Energy Strategy of Russia for the period up to 2035 (main provisions). (http://ac.gov.ru/files/content/1578/11-02-14-energostrategy-2035-pdf.pdf – Access Date: 04.05.2018).
  • Favorskii, O., Filippov, S. and Polishchuk, V. (2017). Priorities in providing Russia’s power industry with competitive equipment // Herald of the Russian Academy of Sciences, 87(4), 310–317.
  • Information Review (2017). Information Review of the System operator of the Unified Energy System. (http://so-ups.ru/fileadmin/files/company/reports/upsreview/2017/ups_review_0117.pdf – Access Date: 04.05.2018).
  • Jiroudková, A., Rovná, L. A., Strielkowski, W. and Šlosarčík, I. (2015). EU Accession, Transition and Further Integration for the Countries of Central and Eastern Europe // Economics & Sociology, 8(2), 11–25. DOI: 10.14254/2071-789X.2015/8-2/1.
  • Lisin, E., Lozenko, V., Komarov, I. and Zlyvko, O. (2015a). Business competitiveness of Russian power plants in current market situation // Transformation in Business & Economics, 14(2B), 557–574.
  • Lisin, E., Rogalev, A., Strielkowski, W. and Komarov, I. (2015b). Sustainable modernization of the Russian power utilities industry // Sustainability, 7(9), 11378–11400. DOI: 10.3390/su70911378.
  • Lisin, E., Shuvalova, D., Volkova, I. and Strielkowski, W. (2018). Sustainable Development of Regional Power Systems and the Consumption of Electric Energy // Sustainability, 10(4), 1111–1121. DOI: 10.3390/su10041111.
  • Lisin, E., Sobolev, A., Strielkowski, W. and Garanin, I. (2016). Thermal efficiency of cogeneration units with multi-stage reheating for Russian municipal heating systems // Energies, 9(4), 269–288. DOI: 10.3390/en9040269.
  • Lisin, E. and Strielkowski, W. (2014). Modelling new economic approaches for the wholesale energy markets in Russia and the EU // Transformation in Business & Economics, 13(2B), 566–580.
  • Maximov, B. and Molodyuk, V. (2008). Theoretical and practical fundamentals of the electricity market. Moscow: MPEI Publishing House, 291 p.
  • Proskuryakova, L. and Filippov, S. (2015). Energy technology Foresight 2030 in Russia: an outlook for safer and more efficient energy future // Energy Procedia, 75, 2798–2806. DOI: 10.1016/j.egypro.2015.07.550.
  • Rausser, G., Strielkowski, W. and Štreimikienė, D. (2018). Smart meters and household electricity consumption: A case study in Ireland // Energy & Environment, 29(1), 131–146. DOI: 10.1177/0958305X17741385.
  • Rogalev, N., Zubkova, A. and Frey, D. (2007). Planning of the CHP production program in conditions of development of competitive relations in the energy markets // Innovations, 1(99), 77–81.
  • Rogalev, N. and Amelina, A. (2017). The strategy of selling electricity of generating companies on the DAM // Safety & Reliability of Power Industry, 2(21), 16–20.
  • Russian Statistics (2016). Statistical Compendium of Federal Service of State Statistics: Industrial production in Russia (http://www.gks.ru/free_doc/doc_2016/prom16.pdf – Access Date: 04.05.2018).
  • Stennikov, V. and Mednikova, E. (2016). Analysis of trends in the development of cities’ heat supply systems // Thermal Engineering, 63(9), 657–665. DOI: 10.1134/ S0040601516090068.
  • Stoft, S. (2002). Power System Economics: Designing Markets for Electricity. Hoboken, New Jersey: IEEE Press, 460 p.
  • Štreimikienė, D., Strielkowski, W., Bilan, Y. and Mikalauskas, I. (2016). Energy dependency and sustainable regional development in the Baltic states: A review // Geographica Pannonica, 20(2), 79–87. DOI: 10.5937/GeoPan1602079S.
  • Strielkowski, W. and Lisin, E. (2016). Optimizing energy contracts for business enterprises and companies // Terra Economicus, 14(2), 100–108. DOI: 10.18522/2073-66062016-14-2-100-109.
  • Zeigarnik, Y. (2006). Some problems with the development of combined generation of electricity and heat in Russia // Energy, 13, 2051–2058. DOI: 10.1016/j.energy.2006.04.003.
Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606