Search

Begin New Search
Proceed to Checkout

Search Results for All:
(Showing results 1 to 2 of 2)



Market Design Considerations for Scarcity Pricing: A Stochastic Equilibrium Framework

Anthony Papavasiliou, Yves Smeers, and Gauthier de Maere d'Aertrycke

Year: 2021
Volume: Volume 42
Number: Number 5
DOI: 10.5547/01956574.42.5.apap
View Abstract

Abstract:
Scarcity pricing is a mechanism for improving the valuation of reserve capacity in real-time electricity markets. The goal of scarcity pricing is to mitigate the missing money problem and enhance investment in flexible resources. The implementation of scarcity pricing is underway in a number of U.S. markets, including Texas and PJM. The implementation is also currently under consideration in Belgium. As the mechanism was originally conceived in the context of a U.S.-style two-settlement system, its implementation in a European setting poses a number of interesting market design dilemmas which can affect the back-propagation of scarcity prices to forward day-ahead markets for energy and reserve capacity. We propose a modeling framework for analyzing these market design choices based on stochastic equilibrium, and use this modeling framework in order to represent and analyze a wide range of market design proposals. We report results on a case study of the Belgian electricity market.



Resource Adequacy through Operating Reserve Demand Curves: Design Options and their Impact on the Market Equilibrium

Georg Thomassen and Prof. Dr. Thomas Bruckner

Year: 2024
Volume: Volume 45
Number: Number 3
DOI: 10.5547/01956574.45.3.gtho
View Abstract

Abstract:
Operating reserve demand curves (ORDCs) have become part of the electricity market design in several power systems. They improve the security of supply through enhanced peak prices that occur already when the system is running low on operating reserves, before an actual shortfall occurs. Previous research, however, suggests that the ORDC's impact on resource adequacy would be thwarted by the merit order effect.Hence, we propose a methodology to model the investment in markets with ORDC, which specifically captures the interaction with renewable deployment. A stylized power system setting is used to determine the market equilibrium at different stages of decarbonization, and compared to a conventional energy-only market. Classical ORDCs consistently increase reliability by attracting additional investments. This effect can be amplified by "shifting" the ORDC, increasing the willingness to pay for balancing reserves. Our results suggest that perfect reliability can be achieved with only moderate cost increases.





Begin New Search
Proceed to Checkout

 

© 2024 International Association for Energy Economics | Privacy Policy | Return Policy