The social efficiency of long-term capacity reserve mechanisms

Finon, Dominique; Meunier, Guy; Pignon, Virginie

doi:10.1016/j.jup.2008.01.001

Cited by 20 publications

(9 citation statements)

References 5 publications

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“…9 The arguments summarised here are similar to those referred to in discussions on the (in)efficiency of capacity markets for adequacy purposes, such as those in Finon et al (2008). BRP imbalance NEGATIVE (short) + 1.5*P DA = 1.5 + 0.5*P DA = 0.5 POSITIVE (long) -1.5*P DA = -1.5 -0.5* P DA = -0.5 BRP imbalance NEGATIVE (short) + 1.5*P DA *(1+ 0.4) = 2.1 + P DA = 1 POSITIVE (long) -P DA = -1 -0.5* P DA /(1+ 0.25) = -0.4 = 0.5*10*(1.5-1.5) -0.5*10*(1.5+0.5)/2 + 0.5*10* (-1.5+(-0.5))/2 = 0.5*10*(1.5-1.5) -0.5*10*(2.1+1)/2 + 0.5*10*(1+0.4)/2…”

Section: Discussionmentioning

confidence: 68%

Well-functioning balancing markets: A prerequisite for wind power integration

et al. 2010

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This article focuses on the design of balancing markets in Europe taking into account an increasing wind power penetration. In several European countries, wind generation is so far not burdened with full balancing responsibility. However, the more wind power penetration, the less bearable for the system not to allocate balancing costs to the responsible parties. Given the variability and limited predictability of wind generation, full balancing exposure is however only feasible conditionally to well-functioning balancing markets. On that account, recommendations ensuring an optimal balancing market design are formulated and their impact on wind generation is assessed. Taking market-based or cost-reflective imbalance prices as the main objective, it is advised that: (1) the imbalance settlement should not contain penalties or power exchange prices, (2) capacity payments should be allocated to imbalanced BRPs via an additive component in the imbalance price and (3) a cap should be imposed on the amount of reserves. Efficient implementation of the proposed market design may require balancing markets being integrated across borders.

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Section: Discussionmentioning

confidence: 68%

Well-functioning balancing markets: A prerequisite for wind power integration

et al. 2010

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“…The volume of the contracted capacity amounts to 2 GW and is set for three two-year periods until 2025. A similar scheme has also been implemented in Norway (Finon et al 2008), the Netherlands (Hölsgens 2019), and Austria (Thema Consulting Group 2013).…”

Section: Strategic Reservementioning

confidence: 99%

Capacity remuneration mechanisms: classification and experiences

Komorowska¹

2021

Polityka Energetyczna – Energy Policy Journal

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Capacity remuneration mechanisms have been imposed globally in order to ensure capacity adequacy and prevent a sharp increase in electricity prices in the long-term. The main causes of their introduction are to provide financial support for companies to generate electricity or reduce consumption in peak demand and ensure sufficient incentives for potential investors. The paper aims to review the capacity remuneration mechanisms introduced in various countries. The following mechanisms are discussed: capacity payment, strategic reserve, reliability options, capacity obligations, and capacity auctions. The paper indicates the main advantages of mechanisms and key challenges related to their introduction and operation as well. The paper contributes to the existing literature by extending and updating the knowledge on the capacity remuneration mechanisms in various energy markets. The results indicate that the most complex schemes are market mechanisms. Regardless of the nature of the traded good (call options, certificates, capacity obligation), the second market structure must be introduced and managed. Consequently, the obligations are imposed on (i) the regulatory body (regulator or transmission system operator), generation companies (or demand-side response), trading companies, and consumers. The other challenge of the implementation of various CRMs is related to the transparent treatment of all technologies. All 102 CRMs should be technologically neutral, but ultimately, some units are more favorable due to their greater impact on the reliability of the power system.

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“…Les contrats de long terme ont néanmoins un inconvénient principal similaire à celui des réserves stratégiques (Finon, Meunier et Pignon, 2008).…”

Section: Contrats De Long Termeunclassified

Architecture de marché et gestion de la demande électrique

Rious¹,

Roques²

2014

rei

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Le développement des effacements de consommation électrique est un problème central dans les marchés électriques respectueux de l’environnement. Faute d’une architecture de marché fournissant de bonnes incitations, le développement des effacements est encore d’ampleur limitée dans la plupart des marchés électriques. En Europe, différents modèles de développement sont considérés pour les effacements, d’un régime régulé à une perspective concurrentielle. Dans cet article, en nous focalisant sur les effacements pour les consommateurs de taille petite et moyenne, nous analysons quels types de signaux de marché devraient être envoyés aux agrégateurs d’effacement pour leur assurer une activité concurrentielle. À partir de résultats de simulations sur huit années de données du système électrique français, nous comparons les options d’architecture de marché quant à leur aptitude à permettre le développement concurrentiel des effacements. Nos simulations démontrent qu’avec les règles de marché actuelles, les effacements ne sont pas une activité rentable dans l’industrie électrique française. L’introduction d’un mécanisme de capacité pourrait apporter des revenus supplémentaires aux agrégateurs d’effacement sous réserve que le système ne soit pas surcapacitaire et que son architecture ne défavorise pas les effacements.

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The social efficiency of long-term capacity reserve mechanisms

Cited by 20 publications

References 5 publications

Well-functioning balancing markets: A prerequisite for wind power integration

Well-functioning balancing markets: A prerequisite for wind power integration

Capacity remuneration mechanisms: classification and experiences

Architecture de marché et gestion de la demande électrique

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