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

Richard John Green ()

Working Papers from Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research

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 which 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.

Date: 2004-03
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Working Paper: Did English Generators Play Cournot? Capacity Withholding in the Electricity Pool (2004)
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