Journal
ENERGY POLICY
Volume 94, Issue -, Pages 401-410Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.enpol.2015.10.028
Keywords
Capacity auctions; Procurement; Missing markets; Interconnectors
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In the energy trilemma of reliability, sustainability and affordability, politicians treat reliability as overriding. The EU assumes the energy-only Target Electricity Model will deliver reliability but the UK argues that a capacity remuneration mechanism is needed. This paper argues that capacity auctions tend to over-procure capacity, exacerbating the missing money problem they were designed to address. The bias is further exacerbated by failing to address some of the missing market problems also neglected in the debate. It examines the case for, criticisms of, and outcome of the first GB capacity auction and problems of trading between different capacity markets. (C) 2015 Elsevier Ltd. All rights reserved.
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