Capacity Mechanisms on Central European Electricity Markets: Effects on Consumers, Producers and Technologies Until 2033

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe reduced attractiveness of investments in reliable power plants under conditions of liberalized markets and the transition towards renewable energies has brought a discussion on capacity policies to Europe. We use a partial equilibrium model to compare important effects of three basic policies. A strategic reserve policy and a capacity market policy with administratively set capacity targets, and the obligation of generators to hold certificates of reliable capacities in relation to their supply. We find important differences of policies for consumers and producers that are depending on existing power plant structure and the elasticity of demand particularly in the medium term perspective until the year 2023. In the longer term until 2033 the results differ less pronounced. However, for the German case we demonstrate the potential to effectively reduce the burden on the economy to achieve a prescribed target through the implementation of a capacity certificate system.

Renewable Energy Support in Germany: Surcharge Development and the Impact of a Decentralized Capacity Mechanism

“…In the 'EOM' setting the policy follows an energy-only market approach, whereas 'CM' represents a capacity market policy based on the obligation of suppliers to hold reliable capacities in excess of peak supply. This is essentially an ideal type of certificate trading system with no market frictions as described in Traber (2014). Here the value of renewables contains the payments for purchasing reliability certificates in addition to market prices.…”

“…We base our model development on the existing framework for the long-term perspective of the European wholesale electricity market called EMELIE-ESY as laid out in Schröder et al (2013), and implement a capacity module (Capmod) with stochastic load events and a capacity mechanism as described in Traber (2014). Furthermore, we include the German feed-in tariff financed by a renewable energy surcharge on final consumption.…”

A coordinated strategic reserve to safeguard the European energy transition

“…The latter effect is likely to dominate the first, such that capacity markets may involve substantial redistribution from consumers to producers. A strategic resreve, which is much smaller in size, should generally have smaller distributional impacts, as indicated by Traber (2014) in a quantitative analysis.…”

Cooperation or Localization in European Capacity Markets? A Coalitional Game over Graph Approach

“…During the last years, a key issue in electricity market design debate was whether Energy-Only-Markets (EOM) are able to provide the capacity adequacy levels needed or this is only feasible through Capacity-Energy Markets (CEM) by introducing various Capacity Remuneration Mechanisms (CRM) along with the energy and ancillary services markets [1][2][3][4][5][6][7][8].…”