Multiple Electricity Markets Design Undergoing Asymmetric Policies on Renewables Expansion: Capacity Adequacy and Revenue Sufficiency

This paper investigates the impact of decentralized and heterogeneous renewable energy sources (RES) expansion policies on providing adequate resources within multiple electricity markets (MEMs). Also, the sharing of the economic interest between different wholesale electricity markets participating in MEMs is analyzed. For this purpose, a new formulation of the stochastic multi-objective mixed-integer non-linear programming problems is used in the agent-based simulation framework to model the impact of different MEMs designs on capacity adequacy (CA) and revenue sufficiency (RS) undergoing asymmetric RES expansion policies. By this modelling, the vulnerability of the different market designs in terms of CA and RS within MEMs is investigated. Also, the power plants' behavior in declaring capacity between wholesale electricity markets is to be analyzed. The results show, regardless of the market mechanism and new invested capacity in each wholesale electricity market, the CA index in all markets participating in the MEMs will be balanced. However, the use of different market designs creates more challenges in providing adequate resources in the capacity mechanism in comparison with the energy-only electricity markets. That means more investment in the conventional power plants in a market does not necessarily increase the capacity adequacy (CA) indices on that market within MEMs. According to the simulation result, high RES development policies do not necessarily lead to reduce the investment of new conventional power plants. Also, different auction mechanisms reduce the power plants' net present value (NPV) in the high-penetrated RES electricity market.

Automated summary

This paper examines the impact of different MEMs designs on capacity adequacy and revenue sufficiency, finding that the CA index will remain balanced regardless of the market mechanism. However, different market designs create challenges in providing adequate resources within the capacity mechanism.