Uncertainty and the long-term adequacy of supply: Simulations of capacity mechanisms in electricity markets

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.…”

Steering Renewable Energy Investments in Favor of Energy System Reliability: A Call for a Hybrid Model

“…Norway has the highest cost for maintaining electricity supply security in Europe partly because of their high share of small-scale intermittent hydrogeneration in the system [13]. In the academic literature, renewable energy sources are often treated as a threat to energy system reliability as well [14][15][16]. Such research normally inquires about what types of capacity mechanisms can better tackle the problem.…”

“…For example, Bhafgwat et al [15,16] ran simulations to determine what type of capacity mechanism would better protect against a high share of renewable energy sources. Lara-Arango et al [14] came to the conclusion that no capacity mechanism can sufficiently tackle the issue because of the uncertainty in the electricity supply from renewable energy sources.…”