The introduction of competition into the electricity supply industry has fundamentally changed the way it works. In light of these changes this book provides a clear and comprehensive explanation of the basic principles underpinning the design and operation of modern competitive electricity markets.Assuming no prior knowledge of economics, Fundamentals of Power System Economics discusses the organization of markets for electrical energy as well as the operational and investment decisions that companies participating in these markets must make.Features include: An introduction to the relevant microeconomics concepts and the theory of the firm. An introduction to the organisation and operation of electricity markets. A clear explanation of the concepts of system security and of the markets for ancillary services. A lucid treatment of the effect of network congestion on electricity markets, including a detailed discussion of locational marginal pricing. A tutorial treatment of the issues surrounding investment in generation and transmission. Numerous illustrative examples. This is a book written by engineers, primarily for engineers, and has been designed in a textbook style with a problem and answer section at the end of each chapter to aid learning. The accessible tutorial style makes this book essential reading for both postgraduate and undergraduate students, professors and practicing engineers alike.Kirschen, Daniel S. is the author of 'Fundamentals of Power System Economics', published 2004 under ISBN 9780470845721 and ISBN 0470845724.