Investment with incomplete markets for risk: The need for long-term contracts
Author
Abstract
Suggested Citation
DOI: 10.1016/j.enpol.2017.01.029
Download full text from publisher
As the access to this document is restricted, you may want to search for a different version of it.
References listed on IDEAS
- Moreno, R. & Barroso, L.A. & Rudnick, H. & Mocarquer, S. & Bezerra, B., 2010. "Auction approaches of long-term contracts to ensure generation investment in electricity markets: Lessons from the Brazilian and Chilean experiences," Energy Policy, Elsevier, vol. 38(10), pages 5758-5769, October.
- Andreas Ehrenmann & Yves Smeers, 2011. "Generation Capacity Expansion in a Risky Environment: A Stochastic Equilibrium Analysis," Operations Research, INFORMS, vol. 59(6), pages 1332-1346, December.
- de Vries, Laurens & Heijnen, Petra, 2008. "The impact of electricity market design upon investment under uncertainty: The effectiveness of capacity mechanisms," Utilities Policy, Elsevier, vol. 16(3), pages 215-227, September.
- Oren, Shmuel S., 2005. "Generation Adequacy via Call Options Obligations: Safe Passage to the Promised Land," The Electricity Journal, Elsevier, vol. 18(9), pages 28-42, November.
- Roques, Fabien A. & Newbery, David M. & Nuttall, William J., 2008.
"Fuel mix diversification incentives in liberalized electricity markets: A Mean-Variance Portfolio theory approach,"
Energy Economics, Elsevier, vol. 30(4), pages 1831-1849, July.
- Fabien A. Roques & David M. Newbery & William J. Nuttall, 2006. "Fuel mix diversification incentives in liberalised electricity markets: a Mean-Variance Portfolio Theory Approach," Working Papers EPRG 0626, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
- EHRENMANN, Andreas & SMEERS, Yves, 2011. "Generation capacity expansion in a risky environment: a stochastic equilibrium analysis," LIDAM Reprints CORE 2379, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Andreas Ehrenmann & Yves Smeers, 2011. "Stochastic Equilibrium Models for Generation Capacity Expansion," International Series in Operations Research & Management Science, in: Marida Bertocchi & Giorgio Consigli & Michael A. H. Dempster (ed.), Stochastic Optimization Methods in Finance and Energy, edition 1, chapter 0, pages 273-310, Springer.
- De Vries, Laurens J., 2007. "Generation adequacy: Helping the market do its job," Utilities Policy, Elsevier, vol. 15(1), pages 20-35, March.
- Fortin, Ines & Fuss, Sabine & Hlouskova, Jaroslava & Khabarov, Nikolay & Obersteiner, Michael & Szolgayova, Jana, 2007. "An Integrated CVaR and Real Options Approach to Investments in the Energy Sector," Economics Series 209, Institute for Advanced Studies.
- Laffont, Jean-Jacques & Tirole, Jean, 1988.
"The Dynamics of Incentive Contracts,"
Econometrica, Econometric Society, vol. 56(5), pages 1153-1175, September.
- Jean-Jacques Laffont & Jean Tirole, 1985. "The Dynamics of Incentive Contracts," Working papers 397, Massachusetts Institute of Technology (MIT), Department of Economics.
- RALPH, Daniel & SMEERS, Yves, 2015. "Risk trading and endogenous probabilities in investment equilibria," LIDAM Reprints CORE 2727, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Álvaro López-Peña & Efraim Centeno & Julián Barquín, 2009. "Long term issues to be addressed by regulators in liberalised electricity systems: generation adequacy and indicative planning. Justification, available mechanisms, and a simulation study on some conc," RSCAS Working Papers 2009/67, European University Institute.
Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
Cited by:
- Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022.
"Why the sustainable provision of low-carbon electricity needs hybrid markets,"
Energy Policy, Elsevier, vol. 171(C).
- Jan-Horst Keppler & Simon Quemin & Marcelo Saguan, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Post-Print hal-03964488, HAL.
- Muñoz, Francisco D. & Suazo-Martínez, Carlos & Pereira, Eduardo & Moreno, Rodrigo, 2021. "Electricity market design for low-carbon and flexible systems: Room for improvement in Chile," Energy Policy, Elsevier, vol. 148(PB).
- Loisel, Rodica & Simon, Corentin, 2021. "Market strategies for large-scale energy storage: Vertical integration versus stand-alone player," Energy Policy, Elsevier, vol. 151(C).
- Boffino, Luigi & Conejo, Antonio J. & Sioshansi, Ramteen & Oggioni, Giorgia, 2019. "A two-stage stochastic optimization planning framework to decarbonize deeply electric power systems," Energy Economics, Elsevier, vol. 84(C).
- Naoki Makimoto & Ryuta Takashima, 2023. "Capacity Market and Investments in Power Generations: Risk-Averse Decision-Making of Power Producer," Energies, MDPI, vol. 16(10), pages 1-19, May.
- Fang, Xichen & Guo, Hongye & Zhang, Da & Chen, Qixin, 2021. "Cost recovery and investment barriers for renewables under market manipulation of thermal collusion," Applied Energy, Elsevier, vol. 285(C).
- Botor, Benjamin & Böcker, Benjamin & Kallabis, Thomas & Weber, Christoph, 2021. "Information shocks and profitability risks for power plant investments – impacts of policy instruments," Energy Economics, Elsevier, vol. 102(C).
- Nathan Dahlin & Rahul Jain, 2020. "A Risk Aware Two-Stage Market Mechanism for Electricity with Renewable Generation," Papers 2003.06119, arXiv.org.
- Dimanchev, Emil & Gabriel, Steven A. & Reichenberg, Lina & Korpås, Magnus, 2024. "Consequences of the missing risk market problem for power system emissions," Energy Economics, Elsevier, vol. 136(C).
- Brito-Pereira, Paulo & Rodilla, Pablo & Mastropietro, Paolo & Batlle, Carlos, 2022. "Self-fulfilling or self-destroying prophecy? The relevance of de-rating factors in modern capacity mechanisms," Applied Energy, Elsevier, vol. 314(C).
- Ambrosius, Mirjam & Egerer, Jonas & Grimm, Veronika & van der Weijde, Adriaan H., 2022. "Risk aversion in multilevel electricity market models with different congestion pricing regimes," Energy Economics, Elsevier, vol. 105(C).
- Neuhoff, Karsten & May, Nils & Richstein, Jörn C., 2022. "Financing renewables in the age of falling technology costs," Resource and Energy Economics, Elsevier, vol. 70(C).
- Gholamreza Dehdasht & Rosli Mohamad Zin & M. Salim Ferwati & Mu’azu Mohammed Abdullahi & Ali Keyvanfar & Ronald McCaffer, 2017. "DEMATEL-ANP Risk Assessment in Oil and Gas Construction Projects," Sustainability, MDPI, vol. 9(8), pages 1-24, August.
- Farhad Billimoria & Paul Simshauser, 2023.
"Contract design for storage in hybrid electricity markets,"
Working Papers
EPRG2304, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
- Billimoria, F. & Simshauser, P., 2023. "Contract Design for Storage in Hybrid Electricity Markets," Cambridge Working Papers in Economics 2322, Faculty of Economics, University of Cambridge.
- Inzunza, Andrés & Muñoz, Francisco D. & Moreno, Rodrigo, 2021. "Measuring the effects of environmental policies on electricity markets risk," Energy Economics, Elsevier, vol. 102(C).
- Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2018. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Working Paper Series in Production and Energy 27, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
- Fernández, Mauricio & Muñoz, Francisco D. & Moreno, Rodrigo, 2020. "Analysis of imperfect competition in natural gas supply contracts for electric power generation: A closed-loop approach," Energy Economics, Elsevier, vol. 87(C).
- Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2019. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Energy Economics, Elsevier, vol. 80(C), pages 1059-1078.
Most related items
These are the items that most often cite the same works as this one and are cited by the same works as this one.- Han Shu & Jacob Mays, 2022. "Beyond capacity: contractual form in electricity reliability obligations," Papers 2210.10858, arXiv.org.
- Shu, Han & Mays, Jacob, 2023. "Beyond capacity: Contractual form in electricity reliability obligations," Energy Economics, Elsevier, vol. 126(C).
- Botor, Benjamin & Böcker, Benjamin & Kallabis, Thomas & Weber, Christoph, 2021. "Information shocks and profitability risks for power plant investments – impacts of policy instruments," Energy Economics, Elsevier, vol. 102(C).
- Munoz, Francisco D. & van der Weijde, Adriaan Hendrik & Hobbs, Benjamin F. & Watson, Jean-Paul, 2017.
"Does risk aversion affect transmission and generation planning? A Western North America case study,"
Energy Economics, Elsevier, vol. 64(C), pages 213-225.
- Francisco D. Munoz & Adriaan Hendrik van der Weijde & Benjamin F. Hobbs & Jean-Paul Watson, 2016. "Does risk aversion affect transmission and generation planning? A Western North America case study," Working Papers EPRG 1621, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
- Munoz, F. D. & van der Weijde, A. H. & Hobbs, B. F. & Watson, J-P., 2016. "Does risk aversion affect transmission and generation planning? A Western North America case study," Cambridge Working Papers in Economics 1647, Faculty of Economics, University of Cambridge.
- Reus, Lorenzo & Munoz, Francisco D. & Moreno, Rodrigo, 2018. "Retail consumers and risk in centralized energy auctions for indexed long-term contracts in Chile," Energy Policy, Elsevier, vol. 114(C), pages 566-577.
- Ambrosius, Mirjam & Egerer, Jonas & Grimm, Veronika & van der Weijde, Adriaan H., 2022. "Risk aversion in multilevel electricity market models with different congestion pricing regimes," Energy Economics, Elsevier, vol. 105(C).
- Lebeau, Alexis & Petitet, Marie & Quemin, Simon & Saguan, Marcelo, 2024. "Long-term issues with the Energy-Only Market design in the context of deep decarbonization," Energy Economics, Elsevier, vol. 132(C).
- Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2018. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Working Paper Series in Production and Energy 27, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
- Tietjen, Oliver & Pahle, Michael & Fuss, Sabine, 2016. "Investment risks in power generation: A comparison of fossil fuel and renewable energy dominated markets," Energy Economics, Elsevier, vol. 58(C), pages 174-185.
- Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2019. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Energy Economics, Elsevier, vol. 80(C), pages 1059-1078.
- Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022.
"Why the sustainable provision of low-carbon electricity needs hybrid markets,"
Energy Policy, Elsevier, vol. 171(C).
- Jan-Horst Keppler & Simon Quemin & Marcelo Saguan, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Post-Print hal-03964488, HAL.
- Meunier, Guy, 2013.
"Risk aversion and technology mix in an electricity market,"
Energy Economics, Elsevier, vol. 40(C), pages 866-874.
- Guy Meunier, 2013. "Risk aversion and technology mix in an electricity market," Post-Print hal-02646565, HAL.
- Guy Meunier, 2013. "Risk aversion and technology mix in an electricity market," Working Papers hal-00906944, HAL.
- Guy Meunier, 2014.
"Risk Aversion and Technology Portfolios,"
Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(4), pages 347-365, June.
- Guy Meunier, 2012. "Risk aversion and technology portfolios," Working Papers hal-00763358, HAL.
- Ibrahim Abada & Andreas Ehrenmann & Yves Smeers, 2017. "Modeling Gas Markets with Endogenous Long-Term Contracts," Operations Research, INFORMS, vol. 65(4), pages 856-877, August.
- Tao, Zhenmin & Moncada, Jorge Andres & Delarue, Erik, 2023. "Exploring the impact of boundedly rational power plant investment decision-making by applying prospect theory," Utilities Policy, Elsevier, vol. 82(C).
- Khan, Agha Salman M. & Verzijlbergh, Remco A. & Sakinci, Ozgur Can & De Vries, Laurens J., 2018. "How do demand response and electrical energy storage affect (the need for) a capacity market?," Applied Energy, Elsevier, vol. 214(C), pages 39-62.
- Kramer, Anja & Krebs, Vanessa & Schmidt, Martin, 2021. "Strictly and Γ-robust counterparts of electricity market models: Perfect competition and Nash–Cournot equilibria," Operations Research Perspectives, Elsevier, vol. 8(C).
- Bhagwat, Pradyumna C. & Iychettira, Kaveri K. & Richstein, Jörn C. & Chappin, Emile J.L. & Vries, Laurens J. De, 2017. "The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 48, pages 76-91.
- Bhagwat, Pradyumna C. & Iychettira, Kaveri K. & Richstein, Jörn C. & Chappin, Emile J.L. & De Vries, Laurens J., 2017. "The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources," Utilities Policy, Elsevier, vol. 48(C), pages 76-91.
- Roques, Fabien & Finon, Dominique, 2017. "Adapting electricity markets to decarbonisation and security of supply objectives: Toward a hybrid regime?," Energy Policy, Elsevier, vol. 105(C), pages 584-596.
More about this item
Keywords
Incomplete markets; Risk functions; Investment in electricity markets; Long term contracts; Capacity markets;All these keywords.
Statistics
Access and download statisticsCorrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:105:y:2017:i:c:p:571-583. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .
Please note that corrections may take a couple of weeks to filter through the various RePEc services.