The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources

Pradyumna C. Bhagwat; Kaveri K. Iychettira; Jörn C. Richstein; Emile J.L. Chappin; Laurens J. De Vries

doi:10.1016/j.jup.2017.09.003

The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources

Pradyumna C. Bhagwat^*, Kaveri K. Iychettira, Jörn C. Richstein, Emile J.L. Chappin, Laurens J. De Vries

^*Corresponding author for this work

Energy and Industry

Research output: Contribution to journal › Article › Scientific › peer-review

39 Citations (Scopus)

145 Downloads (Pure)

Abstract

The effectiveness of a capacity market is analyzed by simulating three conditions that may cause suboptimal investment in the electricity generation: imperfect information and uncertainty; declining demand shocks resulting in load loss; and a growing share of renewable energy sources in the generation portfolio. Implementation of a capacity market can improve supply adequacy and reduce consumer costs. It mainly leads to more investment in low-cost peak generation units. If the administratively determined reserve margin is high enough, the security of supply is not significantly affected by uncertainties or demand shocks. A capacity market is found to be more effective than a strategic reserve for ensuring reliability.

Original language	English
Journal	Utilities Policy: strategy, performance, regulation
DOIs	https://doi.org/10.1016/j.jup.2017.09.003
Publication status	Published - 2017

Keywords

Adequacy policy
Capacity markets
Security of supply

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.jup.2017.09.003

1-s2.0-S0957178716300406-mainFinal published version, 1.88 MBLicence: CC BY

Cite this

@article{ce980fec0c06406a8e578cb34c9eb1a3,

title = "The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources",

abstract = "The effectiveness of a capacity market is analyzed by simulating three conditions that may cause suboptimal investment in the electricity generation: imperfect information and uncertainty; declining demand shocks resulting in load loss; and a growing share of renewable energy sources in the generation portfolio. Implementation of a capacity market can improve supply adequacy and reduce consumer costs. It mainly leads to more investment in low-cost peak generation units. If the administratively determined reserve margin is high enough, the security of supply is not significantly affected by uncertainties or demand shocks. A capacity market is found to be more effective than a strategic reserve for ensuring reliability.",

keywords = "Adequacy policy, Capacity markets, Security of supply",

author = "Bhagwat, {Pradyumna C.} and Iychettira, {Kaveri K.} and Richstein, {J{\"o}rn C.} and Chappin, {Emile J.L.} and {De Vries}, {Laurens J.}",

year = "2017",

doi = "10.1016/j.jup.2017.09.003",

language = "English",

journal = "Utilities Policy: strategy, performance, regulation",

issn = "0957-1787",

publisher = "Elsevier",

}

TY - JOUR

T1 - The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources

AU - Bhagwat, Pradyumna C.

AU - Iychettira, Kaveri K.

AU - Richstein, Jörn C.

AU - Chappin, Emile J.L.

AU - De Vries, Laurens J.

PY - 2017

Y1 - 2017

N2 - The effectiveness of a capacity market is analyzed by simulating three conditions that may cause suboptimal investment in the electricity generation: imperfect information and uncertainty; declining demand shocks resulting in load loss; and a growing share of renewable energy sources in the generation portfolio. Implementation of a capacity market can improve supply adequacy and reduce consumer costs. It mainly leads to more investment in low-cost peak generation units. If the administratively determined reserve margin is high enough, the security of supply is not significantly affected by uncertainties or demand shocks. A capacity market is found to be more effective than a strategic reserve for ensuring reliability.

AB - The effectiveness of a capacity market is analyzed by simulating three conditions that may cause suboptimal investment in the electricity generation: imperfect information and uncertainty; declining demand shocks resulting in load loss; and a growing share of renewable energy sources in the generation portfolio. Implementation of a capacity market can improve supply adequacy and reduce consumer costs. It mainly leads to more investment in low-cost peak generation units. If the administratively determined reserve margin is high enough, the security of supply is not significantly affected by uncertainties or demand shocks. A capacity market is found to be more effective than a strategic reserve for ensuring reliability.

KW - Adequacy policy

KW - Capacity markets

KW - Security of supply

UR - http://resolver.tudelft.nl/uuid:ce980fec-0c06-406a-8e57-8cb34c9eb1a3

UR - http://www.scopus.com/inward/record.url?scp=85029547640&partnerID=8YFLogxK

U2 - 10.1016/j.jup.2017.09.003

DO - 10.1016/j.jup.2017.09.003

M3 - Article

AN - SCOPUS:85029547640

SN - 0957-1787

JO - Utilities Policy: strategy, performance, regulation

JF - Utilities Policy: strategy, performance, regulation

ER -

The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources

Abstract

Keywords

UN SDGs

Access to Document

Other files and links

Fingerprint

Cite this