A survey of stochastic modelling approaches for liberalised electricity markets

Liberalisation of energy markets, climate policy and the promotion of renewable energy have changed the framework conditions of the formerly strictly regulated energy markets. Generating companies are mainly affected by these changing framework conditions as they are exposed to the different risks from liberalised energy markets in combination with huge and largely irreversible investments. Uncertainties facing generating companies include: the development of product prices for electricity as well as for primary energy carriers; technological developments; availability of power plants; the development of regulation and political context, as well as the behaviour of competitors.