Search

Begin New Search
Proceed to Checkout

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



Remuneration of Flexibility using Operating Reserve Demand Curves: A Case Study of Belgium

Anthony Papavasiliou and Yves Smeers

Year: 2017
Volume: Volume 38
Number: Number 6
DOI: 10.5547/01956574.38.6.apap
View Abstract

Abstract:
Flexibility is becoming an increasingly important attribute of conventional generators due to the challenges imposed by the unpredictable, highly variable and non-controllable nature of renewable supply. Paradoxically, flexible units are currently being mothballed or retired in Europe due to financial losses. We investigate an energy-only market design, referred to as operating reserve demand curves, that rewards flexibility by adjusting the real-time energy price to a level that reflects the value of capacity under conditions of scarcity. We test the performance of the mechanism by developing a model of the Belgian electricity market, which is validated against the historical outcomes of the market over a study period of 21 months. We verify that (i) based on the observed market outcomes of our study period, none of the existing combined cycle gas turbines of the Belgian market can cover their investment costs, and (ii) the introduction of price adders that reflect the true value of scarce flexible capacity restores economic viability for most combined cycle gas turbines in the Belgian market.



On the Role of Risk Aversion and Market Design in Capacity Expansion Planning

Christoph Fraunholz, Kim K. Miskiw, Emil Kraft, Wolf Fichtner, and Christoph Weber

Year: 2023
Volume: Volume 44
Number: Number 3
DOI: 10.5547/01956574.44.2.cfra
View Abstract

Abstract:
Investment decisions in competitive power markets are based upon thorough profitability assessments. Thereby, investors typically show a high degree of risk aversion, which is the main argument for capacity mechanisms being implemented around the world. In order to investigate the interdependencies between investors' risk aversion and market design, we extend the agent-based electricity market model PowerACE to account for long-term uncertainties. This allows us to model capacity expansion planning from an agent perspective and with different risk preferences. The enhanced model is then applied in a multi-country case study of the European electricity market. Our results show that assuming risk-averse rather than risk-neutral investors leads to slightly reduced investments in dispatchable capacity, higher wholesale electricity prices, and reduced levels of resource adequacy. These effects are more pronounced in an energy-only market than under a capacity mechanism. Moreover, uncoordinated changes in market design may also lead to negative cross-border effects.





Begin New Search
Proceed to Checkout

 

© 2022 International Association for Energy Economics | Privacy Policy | Return Policy