Capacity remuneration mechanisms in the European market: now but how?

Arthur Henriot and Jean-Michel Glachant

No 2014/84, RSCAS Working Papers from European University Institute

Abstract: This article addresses the functioning of capacity remuneration mechanisms (CRMs) in an integrated European electricity market featuring a high share of intermittent renewable energy sources. We first highlight the close ties between flexibility provision and generation adequacy, and explain why these two issues must be considered concomitantly when developing CRMs. We then show that while Member States have different needs, addressing security of supply in a purely national way will be expensive. We finally identify three prerequisites for a workable Europeanization of national generation adequacy mechanisms: a consistent assessment of adequacy needs and cross-border resources, a dedicated method to allocate risks and remuneration of cross-border resources contribution, and a definition of rights over the system resources at times of extreme scarcity.

Keywords: Capacity remuneration mechanisms; Security of Supply; Flexibility; Integrated Energy Market (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-ene, nep-eur and nep-reg
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