Cross-border effects of capacity mechanisms in interconnected power systems
P.C. Bhagwat (TU Delft - Energy and Industry, European University Institute)
J.C. Richstein (Deutsches Institut für Wirtschaftsforschung, TU Delft - Energy and Industry)
Emile Chappin (TU Delft - Energy and Industry)
K.K. Iychettira (TU Delft - Energy and Industry)
Laurens De Vries (TU Delft - Energy and Industry)
More Info
expand_more
Other than for strictly personal use, it is not permitted to download, forward or distribute the text or part of it, without the consent of the author(s) and/or copyright holder(s), unless the work is under an open content license such as Creative Commons.
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.
help_outline