Study of the Effects of Subscribed Capacity Market on Iran’s Cement Industry Power Cost by Using Self – Rationing Method

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Abstract

Energy policy making in the third millennium is summarized in three areas. The first area: moving toward the use of renewable, clean and environment compatible energy, the second area: restructuring in the energy sector, to make it competitive, & finally, the third area is: increasing efficiency in energy consumption. Power industry as a growing sub-section of energy sector, especially in recent decades, constitutes about one-third of the world’s economy and energy. As in many other countries the power industry in Iran needs to go through some evolution in its policy making & should pay special attention to at least, two areas of the three areas mentioned above. Although the present study is on the two areas of restructuring & increasing efficiency in power industry, it has strong emphasis on demand side management, through economical methods of load management. To this end, using self –rationing method, the feasibility study of subscribed capacity market between factories will be studied.
The research methodology in this study is descriptive and it is based on causal method performed cross sectional in 2006. To gather information a questionnaire was prepared and sent out to cement plants. Results of the research suggest that plants with higher electricity opportunity costs have more willingness to pay (WTP) for subscribed capacity. Self- rationing, through subscribed capacity market can, on the one hand reduce capacity costs of cement plants, and on the other hand, provide some of the needed load for other customers, or even other cement plants. This will result in the reduction of investment costs in providing new capacity during peak period. It will also increase efficiency, one of the goals of load management. This market would eliminate the inefficiency of Woo's model, by removing too much load relief from the system

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