Generation capacity adequacy in interdependent electricity markets

Mauricio Cepeda, Dominique Finon
2011 Energy Policy  
This paper deals with the practical problems related to long-term security of supply in regional electricity markets with transmission constraints. Differences between regulatory policies and markets designs in terms of generation adequacy policies may distort the normal functioning of the neighboring markets, as well as their respective reliability of supply. We test the efficiency of different approaches in two interdependent markets: energyonly market, price capped market without capacity
more » ... hanisms, price capped markets with capacity payments or with forward capacity contracts. We rely on a long-term market simulation model in system dynamics that characterizes expansion planning in a competitive regime. The results show mutual influences on price and reliability between markets coming from differences in market designs The main finding is that in a regional market, the lack of design harmonization between local markets may lead to undesirable side effects in the neighboring markets by distorting their normal functioning.
doi:10.1016/j.enpol.2011.02.063 fatcat:lyhzohf4ibfn3ffop7i6pmzvbm