Cross-border effects of capacity mechanisms in interconnected power systems

Bhagwat, P.C.; Richstein, J.C.; Chappin, E.J.L.; Iychettira, K.K.; De Vries, Laurens

doi:10.1016/j.jup.2017.03.005

Cross-border effects of capacity mechanisms in interconnected power systems

Title

Cross-border effects of capacity mechanisms in interconnected power systems

Author

Bhagwat, P.C. (TU Delft Energie and Industrie; European University Institute)
Richstein, J.C. (TU Delft Energie and Industrie; Deutsches Institut für Wirtschaftsforschung)
Chappin, E.J.L. (TU Delft Energie and Industrie)
Iychettira, K.K. (TU Delft Energie and Industrie)
De Vries, Laurens (TU Delft Energie and Industrie)

Date

2017

Abstract

The cross-border effects of a capacity market and a strategic reserve in interconnected electricity markets are modeled using an agent-based modeling methodology. Both capacity mechanisms improve the security of supply and reduce consumer costs. Our results indicate that interconnections do not affect the effectiveness of a capacity market, while a strategic reserve is affected negatively. The neighboring zone may free ride on the security of supply provided by the zone implementing a capacity mechanism. However, a capacity market causes crowding out of generators in the energy-only zone. A strategic reserve implemented by this region could aid in mitigating this risk.

Subject

Capacity market
Cross-border effect
Strategic reserve

To reference this document use:

http://resolver.tudelft.nl/uuid:c48cedb1-24d7-470f-9746-6e829de493f5

DOI

https://doi.org/10.1016/j.jup.2017.03.005

ISSN

0957-1787

Source

Utilities Policy: strategy, performance, regulation, 46, 33-47

Part of collection

Institutional Repository