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Capacity market design options: A dynamic capacity investment model and a GB case study

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  • Hach, Daniel
  • Chyong, Chi Kong
  • Spinler, Stefan

Abstract

Rising feed-in from renewable energy sources decreases margins, load factors, and thereby profitability of conventional generation in several electricity markets around the world. At the same time, conventional generation is still needed to ensure security of electricity supply. Therefore, capacity markets are currently being widely discussed as a measure to ensure generation adequacy in markets such as France, Germany, and the United States (e.g., Texas), or even implemented for example in Great Britain.

Suggested Citation

  • Hach, Daniel & Chyong, Chi Kong & Spinler, Stefan, 2016. "Capacity market design options: A dynamic capacity investment model and a GB case study," European Journal of Operational Research, Elsevier, vol. 249(2), pages 691-705.
    • Handle: RePEc:eee:ejores:v:249:y:2016:i:2:p:691-705
    DOI: 10.1016/j.ejor.2015.08.034
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    More about this item

    Keywords

    Capacity mechanism; Capacity market; Dynamic capacity investment model; Generation adequacy; Conventional electricity generation investment; Renewable energy sources;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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