Print Email Facebook Twitter An analysis of a forward capacity market with long-term contracts Title An analysis of a forward capacity market with long-term contracts Author Bhagwat, P.C. (TU Delft Energie and Industrie; European University Institute) Marcheselli, A. (TU Delft OLD CIO - Front Office; TU Delft Energie and Industrie; Politecnico di Milano) Richstein, J.C. (TU Delft Energie and Industrie; DIW Berlin) Chappin, E.J.L. (TU Delft Energie and Industrie) De Vries, Laurens (TU Delft Energie and Industrie) Date 2017 Abstract We analyze the effectiveness of a forward capacity market (FCM) with long-term contracts in an electricity market in the presence of a growing share of renewable energy. An agent-based model is used for this analysis. Capacity markets can compensate for the deteriorating incentive to invest in controllable power plants when the share of variable renewable energy sources grows, but may create volatile prices themselves. Capacity markets with long-term contracts have been developed, e.g. in the UK, to stabilize capacity prices. In our analysis, a FCM is effective in providing the required adequacy level and leads to lower cost to consumers and more stable capacity prices, as compared to a yearly capacity market. In case of a demand shock, a FCM may develop an investment cycle, but it still maintains security of supply. Its main effect on the power plant portfolio is more investment in peak plant. Subject Adequacy policyAgent-based modelingCapacity marketsCapacity mechanismsElectricity marketSecurity of supply To reference this document use: http://resolver.tudelft.nl/uuid:64b8f701-38b3-423f-b337-a3796dcd8414 DOI https://doi.org/10.1016/j.enpol.2017.09.037 ISSN 0301-4215 Source Energy Policy, 111, 255-267 Part of collection Institutional Repository Document type journal article Rights © 2017 P.C. Bhagwat, A. Marcheselli, J.C. Richstein, E.J.L. Chappin, Laurens De Vries Files PDF 1_s2.0_S0301421517305967.pdf 1.45 MB Close viewer /islandora/object/uuid:64b8f701-38b3-423f-b337-a3796dcd8414/datastream/OBJ/view