Energy Economics: Supply and Demand Dynamics

This lecture focuses on the economic principles of energy supply and demand, emphasizing their importance in understanding the complexities of the electricity market. The instructor discusses the fundamental concepts of supply and demand, illustrating how they interact to determine market prices. The lecture includes a serious game where students simulate market conditions, making decisions on electricity pricing based on their assigned energy sources, such as nuclear, hydroelectric, and wind. The instructor highlights the significance of understanding marginal costs and the implications of fixed and variable costs in energy production. Additionally, the lecture addresses the challenges of balancing energy supply with demand, particularly during peak times. The discussion also touches on the impact of renewable energy subsidies on market dynamics and the importance of strategic decision-making in energy investments. Overall, this lecture provides a comprehensive overview of the economic factors influencing energy markets and the critical role of supply and demand in shaping energy policies.