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Model-based analysis of the impact of capacity markets on electricity markets

 
: Genoese, Massimo; Genoese, Fabio; Fichtner, Wolf

:

Institute of Electrical and Electronics Engineers -IEEE-:
9th International Conference on the European Energy Market, EEM 2012 : 10-12 May 2012, Florence, Italy
Piscataway, NJ: IEEE Operations Center, 2012
ISBN: 978-1-4673-0832-8 (Online)
ISBN: 978-1-4673-0834-2 (Print)
6 S.
International Conference on the European Energy Market (EEM) <9, 2012, Florence>
Englisch
Konferenzbeitrag
Fraunhofer ISI ()
adequacy; agent-based simulation; capacity payments; electricity market

Abstract
In this paper, we discuss the general necessity of capacity markets. Furthermore, we implement a basic capacity payment mechanism similar to the Spanish one in the existing agent-based electricity market model PowerACE to analyze the impact of such a capacity payment mechanism on the long-term development of investments in conventional capacities and on electricity prices. Considering different scenarios for future energy carrier and CO2 prices, we find that investments are carried out earlier in a system with capacity payments. Also, more capacities are built in the presence of a capacity market. The damping effect on electricity prices is visible but dependent on the development of energy carrier prices and on the characteristics of the payment mechanism.

: http://publica.fraunhofer.de/dokumente/N-228129.html