Review article. Electricity equilibrium models with stochastic demands

In this paper we explicitly account for demand uncertainty in partial equilibrium models of the electricity sector, extending previous work in this area to allow for diverse technologies and temporal fluctuations of demand. Two approaches are discussed. In the first, prices are set ex ante, prior to the resolution of demand uncertainty, to maximize the expected social benefits; in the second, prices are set ex post, after demand uncertainty is resolved, to clear the market rather than rationing or leaving excess capacity idle.