Cross-border effects of capacity mechanisms in interconnected power systems

Bhagwat, P.C.; Richstein, J.C.; Chappin, E.J.L.; Iychettira, K.K.; De Vries, Laurens

doi:10.1016/j.jup.2017.03.005

Cross-border effects of capacity mechanisms in interconnected power systems

Title

Cross-border effects of capacity mechanisms in interconnected power systems

Author

Bhagwat, P.C. (TU Delft Energy & Industry; European University Institute)
Richstein, J.C. (TU Delft Energy & Industry; Deutsches Institut für Wirtschaftsforschung)
Chappin, E.J.L. (TU Delft Energy & Industry)
Iychettira, K.K. (TU Delft Energy & Industry)
De Vries, Laurens (TU Delft Energy & Industry)

Date

2017

Abstract

The cross-border effects of a capacity market and a strategic reserve in interconnected electricity markets are modeled using an agent-based modeling methodology. Both capacity mechanisms improve the security of supply and reduce consumer costs. Our results indicate that interconnections do not affect the effectiveness of a capacity market, while a strategic reserve is affected negatively. The neighboring zone may free ride on the security of supply provided by the zone implementing a capacity mechanism. However, a capacity market causes crowding out of generators in the energy-only zone. A strategic reserve implemented by this region could aid in mitigating this risk.

Subject

Capacity market
Cross-border effect
Strategic reserve

To reference this document use:

http://resolver.tudelft.nl/uuid:c48cedb1-24d7-470f-9746-6e829de493f5

DOI

https://doi.org/10.1016/j.jup.2017.03.005

ISSN

0957-1787

Source

Utilities Policy: strategy, performance, regulation, 46, 33-47

Part of collection

Institutional Repository