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

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

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

Title

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

Author

Bhagwat, P.C. (TU Delft Energie and Industrie)
Iychettira, K.K. (TU Delft Energie and Industrie)
Richstein, J.C. (TU Delft Energie and Industrie)
Chappin, E.J.L. (TU Delft Energie and Industrie)
De Vries, Laurens (TU Delft Energie and Industrie)

Date

2017

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.

Subject

Adequacy policy
Capacity markets
Security of supply

To reference this document use:

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

DOI

https://doi.org/10.1016/j.jup.2017.09.003

ISSN

0957-1787

Source

Utilities Policy: strategy, performance, regulation

Part of collection

Institutional Repository