Forward contracts in electricity markets and capacity investment: A simulation study

Long-term assessment of power capacity incentives by modeling generation investment dynamics under irreversibility and uncertainty

“…Results have suggested that the integration of capacity incentives, especially the capacity market, would allow the system to develop a steadier behavior in the long term, thus limiting the occurrence of construction cycles. In general, this finding is coincident with conclusions of very recent research papers addressing the same topic (Petitet et al, 2017;Abani et al, 2018;� Alvarez-Uribe et al, 2018;Heidarizadeh and Ahmadian, 2019). This work has deepened the analysis by explicitly modeling the decision-making of investors under irreversibility and uncertainty.…”

“…capacity payments (Ford, 1999;Assili et al, 2008;Hasani-Marzooni and Hosseini, 2013;Pereira and Saraiva, 2013;Ibanez-Lopez et al, 2017). In recent years, research focus has been mainly on evaluating quantity-based mechanisms, comprising a capacity market and a strategic reserve mechanism (Hary et al, 2016); a forward market ( � Alvarez-Uribe et al, 2018); and a capacity certificate (Heidarizadeh and Ahmadian, 2019). Both price-based and quantity-based mechanisms have been assesed by de Vries and Heijnen (2008) and Hasani-Marzooni and Hosseini (2011a).…”

Renewable energy sources and the cycles in deregulated electricity markets

“…ܲܲ represents the perceived price by the investors, ݀ is the intercept which is the minimum total desired capacity once the ܲܲ is zero, ‫ܥ‬ is the Cournot-Nash production equilibrium and ܲ is Cournot-Nash price equilibrium. This equilibrium was estimated from the first order condition, assuming an interior solution and considering the best response functions [20], which values are consistent with previous simulations [32,34] and experimental studies [29,31,33]. Cost differences are considered in this estimation via quadratic functions, where RES technologies are capital intensive but cheaper to operate.…”

“…The base case model (CES) is identical to a previous model [29] which in turn is based on a simple stock management model [30]. This model has been used to study the effect of mothballing [31], long-term strategic reserve contracting, centralized auctioning [32,33], and forward markets [34]. We extended the original model to research the effect the introduction of renewable energy sources has on capacity cycles.…”

Probabilistic evaluation of renewable energy curtailment under forward electricity market

“…To date, several studies have investigated the transaction mode of forward market in power market reform starting at 2015 in China [2], [3]. Reference [4] builds a new dynamic model to evaluate the effect of forward market on cyclical price behavior in electricity markets. An equilibrium model for joint forward contracts and dayahead markets are proposed in [5], and the complicated market behavior of producers and consumers are also modeled.…”