A System Dynamics Model for the Analysis of the Deregulation in Electricity Market

Abstract

The process of privatization of the electricity market involves the serious needs of the industry in order to increase productivity, attract private investment and partnerships. If current trends continue, the total investment needed for the industry is not to be able to be supplied from domestic sources. The participation of the private sector in capacity expansion is essential. In this study, a system dynamic approach is presented to study the pricing strategies in electricity market and also to analyze the rate of load consumption in Iranian electricity market. The proposed model enables the decision-maker to assess the effect of prices on the average rate of energy consumption as well as to simulate and predict the behavior of the model with/without taking into account subsidies to the electricity sales rate. The results show that capacity under construction is of high amplitude fluctuations. Moreover, the energy consumption increases with increasing capacity growth.