Understanding Marginal Costs in Electricity Pricing

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This lecture delves into the roles of long-run and short-run marginal costs (LRMC and SRMC) in pricing and cost recovery within energy markets. It utilises a comprehensive five-step model and provides a robust analysis across multiple frameworks. The presentation will explore the resolution of SRMC degeneracy through demand elasticity, and intertemporal pricing strategies, especially within renewable and fossil energy contexts. Methodologies including capacity expansion models and distinct...