The Texas Energy-Only Resource Adequacy Mechanism

Schubert, Eric; Hurlbut, David; Adib, Parviz; Oren, Shmuel S.

doi:10.1016/j.tej.2006.11.003

Cited by 11 publications

(4 citation statements)

References 3 publications

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“…Many electricity markets have a price-cap in order to prevent the market power. It is generally conceived that the low price-cap is a major reason for insufficient investment and there is no need for other capacity mechanisms due to the fact that the market without the price-cap can provide a proper signal with respect to investment [11]. Here we need to deliberate on the high price-cap in two perspectives.…”

Section: Market Equilibrium From a Static Viewpointmentioning

confidence: 99%

Assessing impacts of capacity mechanism on long‐term market equilibrium

Han

Hur

Sohn

et al. 2009

Int Trans Elec Energy Syst

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SUMMARYIt has long been presumed that the electricity market can provide the correct economic signal for the investment of new generation. However, in response to concerns over the reasonableness of an investment signal in the energy-only electricity market, various designs of capacity mechanisms have been proposed to solve the adequacy problem. In this paper, we focus on analyzing the influence of capacity mechanisms on the long-term market equilibrium in the electricity market. Three market models are considered: a price-spike model, a capacity payment model, and a capacity demand curve model. The long-term market equilibrium in each market model is calculated through load duration, price duration, net revenue, and generation investment models. To consider the generation companies' investment behavior when the profit contains uncertainties, different utility functions representing their risk attitude is introduced. This paper presents the sensitivity of the risk components such as the change of the generation companies' risk attitude, the forced outage rate, the error of the forecasted peak load, and the load factor. The performance of each market model has been compared, which would come to the conclusion that when the electricity market does not have enough demand response and the ability to remove the abuse of market power, as transitional measures, it is necessary to adopt the capacity demand curve model even though it is not market-based approach and has the drawback that the performance depends on the shape of the capacity demand curve and market conditions.

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Section: Market Equilibrium From a Static Viewpointmentioning

confidence: 99%

Assessing impacts of capacity mechanism on long‐term market equilibrium

Han

Hur

Sohn

et al. 2009

Int Trans Elec Energy Syst

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“…However, lack of competition, lack of effective trading arrangements, lack of clarity on environmental policy and lack of effective regulatory approval processes all raise concerns for adequacy and timeliness of investments. 1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 (Schubert et. al., 2006).…”

Section: In Australia Wholesale Electricity Prices Spike To Extreme mentioning

confidence: 99%

Tackling Investment Challenges in Power Generation in IEA Countries

2007

Energy Market Experience

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This book benefi ted greatly from input, suggestions, comments and corrections from several contributors. Jolanka Fisher of the Country Studies Division and Fabien Roques of the Economic Analysis Division of the IEA, and William Blyth, Oxford Energy Associates, contributed with parts of the book and with comments. Professor David Newbery, University of Cambridge, gave important directions and comments. Considerable input was provided

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“…Some argue that creating capacity markets will delay the development of a sufficient demand response, which is the right way to ultimately address resource adequacy problem. They believe in other approaches, such as forward contracts and call options to ensure generation investment [4][5] [6] [7].…”

Section: Introductionmentioning

confidence: 99%

Risk analysis of volume cheat strategy in a competitive capacity market

Feng

2009

2009 IEEE Power &Amp; Energy Society General Meeting

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: Capacity market provides additional revenue stream for the power suppliers. In a capacity-energy combined market environment, suppliers have incentives to deliberately over-offer their capacities in the capacity market while bid very high price in the energy and ancillary markets to avoid operation. This paper analyzes the risks and profits of this capacity-overoffer behavior, and develops a method for computing nonoperable penalty level which can prevent the capacity-over-offer behavior. It is found that the effective penalty level is highly correlated with the stochastic characteristics of the supplier's profit streams and attitudes towards risk. Two types of suppliers are identified with high potential of capacity cheating behavior in the analysis. The methodology and the results are potentially useful for regulating participants' misbehaviors and enhancing the operation security in a capacity-energy market environment.

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The Texas Energy-Only Resource Adequacy Mechanism

Cited by 11 publications

References 3 publications

Assessing impacts of capacity mechanism on long‐term market equilibrium

Assessing impacts of capacity mechanism on long‐term market equilibrium

Tackling Investment Challenges in Power Generation in IEA Countries

Risk analysis of volume cheat strategy in a competitive capacity market

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