Different Approaches to Supply Adequacy in Electricity Markets

Juan Rosellon

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies the electricity market design long run problem of ensuring enough generation capacity to meet future demand (resource adequacy). Reform processes worldwide have shown that it is difficult for the market alone to provide incentives to attract enough investment in capacity reserves due to technical and institutional features. We study several measures that have been proposed internationally to cope with this problem including strategic reserves, capacity payments, capacity requirements, and call options. The analytical and practical strengths and weaknesses of each approach are discussed .

Keywords: Supply adequacy; electricity markets (search for similar items in EconPapers)
JEL-codes: L51 L94 (search for similar items in EconPapers)
Date: 2006-12-19
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