Beyond capacity: Contractual form in electricity reliability obligations

نویسندگان

چکیده

Liberalized electricity markets often include resource adequacy mechanisms that require consumers to contract with generation resources well in advance of real-time operations. While administratively defined have most commonly taken the form a capacity obligation, efficient would feature broad array arrangements adapted risk profiles and appetites market participants. This article considers how financial hedge embedded alternative designs can induce different responses from risk-averse investors, consequences for mix structure. We construct stochastic equilibrium model describing competitive incomplete trading compute investment equilibria under contracting regimes. Two policy recommendations result. First, avoid creating inefficiency by crowding out other forms sharing, system operators should allow contracted through means opt mandatory mechanisms, their contribution those requirements subtracted demand curves. Second, if they wish promote single contractual form, regulators consider replacing existing option-like shaped forward energy. Beyond these recommendations, we discuss tension liberalized systems face seeking both reliability outcomes.

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ژورنال

عنوان ژورنال: Energy Economics

سال: 2023

ISSN: ['1873-6181', '0140-9883']

DOI: https://doi.org/10.1016/j.eneco.2023.106943