Capacity Market and Investments in Power Generations: Risk-Averse Decision-Making of Power Producer

The penetration of power generations from renewable energy sources into the market has a significant impact on capacity factor existing generations. This is because producers cannot recover capital cost with high operating possibly due to underinvestment. One solution address this problem includes mechanism; that is, capacities can be sold through or bilateral contract. Many schemes mechanism have been used worldwide. In study, we examine an investment in plant both electricity and markets. effect opportunity uncertainty risk aversion analyzed by real options approach one analytical methods for decisions under uncertainty. timing standard energy-only compared market. When averse producer relatively small, income obtained whereas, when high, gained markets sake enough profit.