Missing Money and Missing Markets: Reliability, Capacity Auctions and Interconnectors
David M Newbery ()
Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
In the energy trilemma of reliability, sustainability and affordability, politicians treat reliability as over-riding. The EU assumes the energy-only Target Electricity Model will deliver reliability but the UK argues that a capacity remuneration mechanism is needed. This paper argues that capacity auctions tend to over-procure capacity, exacerbating the missing money problem they were designed to address. The bias is further exacerbated by failing to address some of the missing market problems also neglected in the debate. It examines the case for, criticisms of, and outcome of the first GB capacity auction and problems of trading between different capacity markets.
Keywords: capacity markets; renewables; procurement volume; interconnectors (search for similar items in EconPapers)
JEL-codes: L94 D44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-reg
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Journal Article: Missing money and missing markets: Reliability, capacity auctions and interconnectors (2016)
Working Paper: Missing Money and Missing Markets: Reliability, Capacity Auctions and Interconnectors (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1513
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