Rosellon, Juan (2006): Different Approaches to Supply Adequacy in Electricity Markets. Published in: Energy Studies Review , Vol. 14, No. 2
Download (397kB) | Preview
This paper studies the electricity market design long run problem of ensuring enough generation capacity to meet future demand (resource adequacy). Reform processes worldwide have shown that it is difficult for the market alone to provide incentives to attract enough investment in capacity reserves due to technical and institutional features. We study several measures that have been proposed internationally to cope with this problem including strategic reserves, capacity payments, capacity requirements, and call options. The analytical and practical strengths and weaknesses of each approach are discussed .
|Item Type:||MPRA Paper|
|Original Title:||Different Approaches to Supply Adequacy in Electricity Markets|
|Keywords:||Supply adequacy, electricity markets|
|Subjects:||L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation
L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L94 - Electric Utilities
|Depositing User:||Juan Rosellon|
|Date Deposited:||13. Apr 2010 13:58|
|Last Modified:||12. Feb 2013 12:31|
Barzalobre, V. (2000), “Alternativas de Desarrollo de Generación Eléctrica en Economías de Transición,” Tesis Licenciatura en Economía, CIDE, Mexico.
Borenstein, S. (2002) “The Trouble with Electricity Markets: Understanding California’s Restructuring Disaster,” Journal of Economic Perspectives, 16: 191-211.
Bouttes, J.P. (2004), Roundtable “Market Design and Competition in Electricity,” presented at IDEI-CEPR conference “Competition and Coordination in the Electricity Industry,” Jan. 16, 17.
Bushnell, J. (2005), “Electricity Resource Adequacy: Matching Policies and Goals,” Center for the Study of Energy Markets. Paper CSEMWP-146. (http://repositories.cdlib.org/ucei/csem/CSEMWP-146 ).
Carreón-Rodríguez, V. G. and J. Rosellón (2002), “La Reforma del Sector Eléctrico Mexicano: Recomendaciones de Política Pública,” Gestión y Política Pública, Vol. XI, No. 2, pp. 243-300.
Carreón-Rodríguez, V.G., and J. Rosellón (2005), “Incentives for the Expansion of Electricity Supply and Capacity Reserves in the Mexican Electricity Sector,” CIDE Working Paper, E-332.
Carreón-Rodríguez, V.G., Jiménez San Vicente, Armando, and J. Rosellón (2006), “The Mexican Electricity Sector: Economic, Legal and Political Issues,” Working Paper, Program on Energy and Sustainable Development, Center for Environmental Science and Policy, Stanford University (available at: http://cesp.stanford.edu/publications/20311/ ).
Chandley, J. D., and W. W. Hogan (2002), “Initial Comments of John. Chandley and William Hogan on the Standard Market Design NOPR,” November 11, available at: http://ksghome.harvard.edu/~.whogan.cbg.Ksg/.
Chao, H.P. and R. Wilson (2002), “Multi-Dimensional Procurement Auctions for Power Reserves: Robust Incentive-Compatible Scoring and Settlement Rules,” Journal of Regulatory Economics, 22:2, 161-183.
Commonwealth of Australia (2002), “Towards a Truly National and Efficient Energy Market,” available at http://www.ksg.harvard.edu/hepg/Papers/Australian.govt_National.energy.report_02.pdf
Cramton, P., H. Chao and R. Wilson (2005), “Review of the Proposed Reserve Markets in New England,” mimeo (http://www.cramton.umd.edu/papers2005-2009/cramton-chao-wilson-review-of-proposed-reserve-markets.pdf )
Creti, A. and N. Fabra (2004), “Capacity Markets for Electricity,” Working Paper, UCEI, CSEM WP-124 (available at http://www.ucei.berkeley.edu/PDF/csemwp124.pdf ). Davis, T. (2004), “New England Officials, Utilities Yowl Over Installed Capacity Plan,” The Energy Daily, Wednesday, March 24.
De Vries, L.J. (2004), “Securing the public interest in electricity generation markets, The myths of the invisible hand and the copper plate.” Ph.D. dissertation, Delft University of Technology, Faculty of Technology, Policy and Management (available at: http://www.tbm.tudelft.nl/webstaf/laurensv/LJdeVries_dissertation.pdf ).
De Vries, L. and K. Neuhoff (2003), “Insufficient Investment in Generating Capacity in Energy-Only Electricity Markets,” paper presented at 2nd Workshop on Applied Infrastructure Research (Regulation and Investment in Infrastructure Provision-Theory and Policy), TU Berlin WIP, DIW Berlin, October 11.
FERC (2002), Notice of Proposed Rulemaking. Remedying Undue Discrimination through Open Access Transmission Service and Standard Market Design, Docket No. RM01-12-000, July 31.(FERC: Federal Energy Regulatory Commission) Ford, A. (1999), “Cycles in Competitive Electricity Markets: A simulation Study of the Western United States,” Energy Policy (27): 637-658.
Green, R. (2004), “Did English Generators Play Cournot?,”, Cambridge Working Papers in Economics, CWPE 0425-CMI 41, University of Cambridge (available at: http://www.econ.cam.ac.uk/electricity/publications/wp/ep41.pdf ).
Gülen, G. (2002) “Capacity Payments,” presentation, 22nd Annual IAEE/USAEE North American Conference, Vancouver 6-8 October.
Harvard Electricity Policy Group (2003), “Rapporteur's Summaries of HEPG Thirty-First Plenary Session,” May 21-22.
Hobbs, B. F., Iñón, J. and S. E. Stoft (2002), “Installed Capacity Requirements and Price Caps: Oil on the Water or Fuel on the Fire,” The Electricity Journal, July, pp. 23-34. Hunt, S. (2002), Making Competition Work in Electricity, New York, John Wiley & Sons.
IEA (2002), Security of Supply in Electricity Markets: Evidence and Policy Issues, OECD/IEA. (IEA: International Energy Agency).
Joskow, P. (2003), “The difficult transition to competitive electricity markets in the U.S.,” Working Paper,” Cambridge Working Papers in Economics, CWPE 0329-CMI 28, University of Cambridge (available at: http://www.econ.cam.ac.uk/electricity/publications/wp/ep28.pdf ).
Joskow, P. and J. Tirole (2004), “Reliability and Competitive Electricity Markets,” NBER Working Paper, No. 10472 (http://www.nber.org/papers/w10472 )
Knops, H. (2002), “Electricity Supply: Secure under Competition Law?,” proceedings, 22nd Annual IAEE/USAEE North American Conference, Vancouver 6-8 October.
Madrigal, M, and F. de Rosenzweig (2003), “Present and Future Approaches to Ensure Supply Adequacy in the Mexican Electricity Industry,” paper presented at the Power Engineering Society Meeting, IEEE, vol. 1, pages 540-543, 13-17 July, Toronto.
Murphy, F. H., and Y. Smeers (2002), “Generation Capacity Expansion in Imperfectly Competitive Restructured Electricity Markets,” CORE Discussion Paper, 69. Newbery, D. M., (1995), “Power Markets and Market Power,” The Energy Journal, Vol. 16, No. 3, pp. 39-66.
Oren, S. (2003), “Ensuring Generation Adequacy in Competitive Electricity Markets,” Energy Policy and Economics Working Paper, UCEI, EPE 007 (http://www.ucei.berkeley.edu/pwrpubs/epe007.html )
Oren, S. and R. Sioshansi (2003), “Joint Energy and Reserves Auction with Opportunity Cost Payment for Reserves,” Energy Policy and Economics Working Paper, UCEI, EPE 008 (http://www.ucei.berkeley.edu/PDF/EPE_008.pdf )
Patton, D. S. (2002) “Review of New York Electricity Markets,” New York Independent System Operator, October 15, Summer.
PJM, Monitoring Market unit (2003), “State of the Market Annual Report,” http://www.pjm.com (PJM: Pennsylvania, Maryland, and New Jersey ISO).
Roques, F., D. M. Newbery, and W. J. Nuttal(2004), “Generation Adequacy and Investment Incentives in Britain: from the Pool to NETA,” Cambridge Working Papers in Economics, CWPE 0459-CMI 58, University of Cambridge (available at: http://www.econ.cam.ac.uk/electricity/publications/wp/ep58.pdf ).
Singh, H. (2002), “Alternatives for Capacity Payments: Assuring Supply Adequacy in Electricity Markets,” presentation, 22nd Annual IAEE/USAEE North American Conference, Vancouver 6-8 October.
Vázquez, C., M. Rivier, and I. Pérez Arriaga (2002), “A Market Approach to Long-Term Security of Supply,” IEEE Transactions on Power Systems, Vol. 17, pp. 349-357, May 2002.
Wilson, R. (2002) “Architecture of Power Markets,” Econometrica, 70, pp. 1299-1340.