Coordination of risk-based generation investments in conventional and renewable capacities in oligopolistic electricity markets: A robust regulatory tool

Aryani, Morteza; Ahmadian, Mohammad Taghi; Sheikh‐El‐Eslami, Mohammad Kazem

doi:10.1016/j.energy.2020.118856

Cited by 3 publications

(3 citation statements)

References 42 publications

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“…In these models, the individual profit maximization problems faced by the different market players are simultaneously solved in order to find an equilibrium with no incentive for any of the actors to unilaterally deviate. Equilibrium models generally allow to represent uncertainties (e.g., Schröder et al, 2013) as well as risk aversion (e.g., Ehrenmann and Smeers, 2011;Fan et al, 2012;Mays et al, 2019;Aryani et al, 2021). However, this type of models is particularly challenging to solve, so typically only smallscale systems can be investigated (Anwar et al, 2022).…”

Section: Literature Review and Research Gapmentioning

confidence: 99%

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

Fraunholz¹,

Miskiw²,

Kraft³

et al. 2023

The Energy Journal

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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.

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Section: Literature Review and Research Gapmentioning

confidence: 99%

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

Fraunholz¹,

Miskiw²,

Kraft³

et al. 2023

The Energy Journal

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“…A case study was conducted on the ERCOT market, comparing the outcomes from the equilibrium framework with the ones resulting from a traditional centralized least-cost planning model. (Aryani et al, 2021) developed a bi-level robust regulatory model to analyze generation companies' investment response to various regulatory decisions or players' behaviors, including capacity markets, subsidies or uncertainty. A similar model was used in (Aryani et al, 2020), to investigate capacity and energy payments for conventional and renewable generations, necessary to achieve targets for adequacy and emission reduction.…”

Section: Capacity Remuneration Mechanismsmentioning

confidence: 99%

Should Electricity Market Designs be Improved to Drive Decarbonization?

Chattopadhyay¹,

Suski²

2022

Policy Research Working Papers

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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“…Esta propuesta la aplican a un proyecto de mejoramiento de la red eléctrica en el Reino Unido. Aryani et al (2021) presentan una herramienta regulatoria para la coordinación de inversiones en generación basada en riesgo en capacidades convencionales y renovables, considerando los objetivos del regulador para la adecuación y las condiciones ambientales. El modelo lo está dado en dos niveles.…”

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Un juego de inversión con información completa e incompleta aplicado al mercado eléctrico

Mazo

Díaz

Lozano

2022

CyA

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<p>El propósito de este trabajo es presentar dos juegos de inversión, con información completa e imperfecta en tres etapas, que permita la identificación del equilibrio de los jugadores en un mercado oligopólico. La reestructuración del mercado de energía trajo consigo la aparición de nuevos competidores convirtiendo al sector en un escenario con alto riego e incertidumbre, como consecuencia de la volatilidad de la demanda, competencia entre agentes, los precios de la electricidad y de los combustibles, dificultando de esta forma la toma de decisiones en relación con la inversión en la generación de la electricidad. Esta propuesta aplica como metodología la teoría de juegos que ayuda a la toma de decisiones en una estrategia de competencia imperfecta. Se concluye que cuando hay suficiente información tanto para el titular como el potencial entrante, la mejor opción es invertir, pero cuando la información es asimétrica, la mejor opción para el Potencial Entrante es invertir.</p>

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Coordination of risk-based generation investments in conventional and renewable capacities in oligopolistic electricity markets: A robust regulatory tool

Cited by 3 publications

References 42 publications

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

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

Should Electricity Market Designs be Improved to Drive Decarbonization?

Un juego de inversión con información completa e incompleta aplicado al mercado eléctrico

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