Did English Generators Play Cournot? Capacity Withholding in the Electricity Pool

Richard John Green ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Electricity generators can raise the price of power by withholding their plant from the market. We discuss two ways in which this could have affected prices in the England and Wales Pool. Withholding low-cost capacity that should be generating will raise energy prices but make the pattern of generation less efficient. This pattern improved significantly after privatisation. Withholding capacity that was not expected to generate would raise the Capacity Payments based on spare capacity. On a multi-year basis, these did not usually exceed ‘competitive’ levels, the cost of keeping stations open. The evidence for large-scale capacity withholding is weak.

Keywords: Electricity prices; Cournot competition; capacity withholding (search for similar items in EconPapers)
JEL-codes: L94 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ene and nep-ind
Date: 2004-02
Note: CMI41, IO
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Working Paper: Did English Generators Play Cournot? Capacity withholding in the Electricity Pool (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:cam:camdae:0425

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