Back to Search
Start Over
Strategic Behaviour in a Capacity Market? The New Irish Electricity Market Design.
- Source :
- Energy Journal; 2019 Special Issue 1, Vol. 40, p105-126, 22p
- Publication Year :
- 2019
-
Abstract
- The transition to a low-carbon power system requires growing the share of generation from (intermittent) renewables while ensuring security of supply. Policymakers and economists increasingly see a capacity mechanism as a way to deal with this challenge. Yet this raises new concerns about the exercise of market power by large players via the capacity auction. We present a new modelling approach that captures such strategic behaviour together with a set of ex ante empirical estimates for the new Irish electricity market design (I-SEM)--in which a single firm controls 44% of generation capacity (excluding wind). We find significant costs of strategic behaviour, even with new entry: In our baseline scenarios, procurement costs in the capacity auction are around 150-400 million EUR (or 40-100%) above the competitive least-cost solution. From a policy perspective, we also examine how market power can be measured and mitigated through auction design. [ABSTRACT FROM AUTHOR]
- Subjects :
- MARKET power
ELECTRICITY
BEHAVIOR
MARKETS
ECONOMISTS
AUCTIONS
Subjects
Details
- Language :
- English
- ISSN :
- 01956574
- Volume :
- 40
- Database :
- Complementary Index
- Journal :
- Energy Journal
- Publication Type :
- Academic Journal
- Accession number :
- 138044030
- Full Text :
- https://doi.org/10.5547/01956574.40.SI1.jtei