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 Energy & Industry)
Iychettira, K.K. (TU Delft Energy & Industry)
Richstein, J.C. (TU Delft Energy & Industry)
Chappin, E.J.L. (TU Delft Energy & Industry)
De Vries, Laurens (TU Delft Energy & Industry)

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