A Unique Competitive Equilibrium on Interdependent Spot Electricity and Reserve Capacity Markets

Jan Richter ()

No 2011-9, EWI Working Papers from Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)

Abstract: This paper studies the interdependency of a spot electricity market and a market for incremental reserve capacity in a competitive setting, where a continuum of firms supplies both markets. It is proved that a simultaneous competitive equilibrium on both markets exists in the stylised model used. It turns out that all market equilibria are characterised essentially by a u-shaped reserve capacity market bidding function and that the set of suppliers declaring reserve capacity constitutes an interval. If the supplier’s marginal cost curve is convex, then a unique equilibrium exists.

Keywords: Competitive Equilibrium; Electricity; Reserve Capacity; Simultaneous Equilibrium (search for similar items in EconPapers)
JEL-codes: D41 D44 L11 L94 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011-08-23
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ewikln:2011_009

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