This course is discontinued

ECON4930 – Electricity Economics

Schedule, syllabus and examination date

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Course content

The course gives a systematic analysis of electricity-economics issues using economic theory for an electricity system based on hydropower alone and together with other generating technologies. The focus is on optimal management of given production capacities. The existence of hydropower with storage of water implies that the management problem is a dynamic one.

The main parts of the course are:
1. The first part consists of introduction to electricity economics involving hydropower, the analysis of the management problem within an aggregated pure hydropower system with a constraint on the amount of stored water, and extension to many hydropower plants. A social planning perspective is adopted.
2. The second part extends the analysis to include thermal generating capacities in addition to hydropower, and run-of-the river and wind generating capacities.
3. The third part introduces trade of electricity across national borders.
4. The fourth part extends the analysis to include network transport from producers to consumers involving loss in the network.
5. The fifth part investigates market power based on monopoly.
6. The sixth part introduces stochastic inflows to the reservoirs.
7. The final part discusses actual organizations of electricity systems and lessons learned from the theoretical analyses above.

Learning outcome


  • know key qualitative results as to optimal social planning in electicity economics when hydropower is involved
  • have a satisfactory understanding of how to formulate dynamic management models using standard non-linear programming
  • understand how constraints on the generating system and uncertainty of inflows of water to hydro reservoirs affect the optimal path of social prices
  • be able to discuss actual market organisations in view of theoretical results obtained from the social planning analyses
  • be able to read and present literature on these topics.

    You should
  • be able to read and understand project reports and journal articles that make use of the concepts and methods that are introduced in the course
  • be able to make use of the course content in your own academic work, for example in analyses that are part of the master’s thesis


Students who are admitted to study programmes at UiO must each semester register which courses and exams they wish to sign up for in Studentweb.

If you are not already enrolled as a student at UiO, please see our information about admission requirements and procedures.


Formal prerequisite knowledge

Bachelor's degree in Economics, or equivalent.

Recommended previous knowledge

Background in non-linear programming, e.g. ECON4140 – Mathematics 3: Differential Equations, Static and Dynamic Optimization / ECON4145.


Lectures: 2 hours per week throughout the semester.

Seminars: 2 hours per week through parts of the semester.

There might occur weeks exempt from teaching (where students are expected to do compulsory term paper).


A 3-hour written exam.

Examination support material

Students may use dictionaries at this exam. Dictionaries must be handed in before the examination. Please read regulations for dictionaries permitted at the examination.

Language of examination

The problem set will be given in English. Answers can be given in Norwegian, Swedish, Danish or in English. See § 5.4 in Regulations governing studies and examinations at the University of Oslo.

Grading scale

Grades are awarded on a scale from A to F, where A is the best grade and F is a fail. Read more about the grading system.

Explanations and appeals

Resit an examination

The Department of Economics has passed following resolution for ECON-courses: It will no longer be possible for candidates to register for an exam in a lower level course after having passed exams in intermediate and advanced level courses in the same subject area (also where there are no pre-requisites that apply to the intermediate course). Further information can be found here.

Students who might wish to retake the exam later, are not guaranteed that the course is ever repeated with a similar reading list, nor that the exam arrangement will be the same.

Withdrawal from an examination

It is possible to take the exam up to 3 times. If you withdraw from the exam after the deadline or during the exam, this will be counted as an examination attempt.

Special examination arrangements

Application form, deadline and requirements for special examination arrangements.

Facts about this course






Offered for the last time Spring 2013


Offered for the last time Spring 2013

Teaching language