Delivering a reliable power supply to consumers has always been a central objective of market design and various solutions to this challenge have been adopted in Europe and elsewhere. In the context of wholesale power markets, these solutions have generally taken the form of creating market rules to pay for firm capacity alongside energy-only prices. A closer look at the new reliability challenges associated with meeting Europe’s decarbonisation targets suggests that our collective thinking will need to evolve “beyond capacity markets” in order to address them. In particular, the power system will need resources capable of rapidly changing output or flexing demand frequently and continuously throughout the year around the energy availability from intermittent renewables. Based on these requirements and related considerations, RAP sets out in this paper a set of market design principles that can be used to assess the suitability of proposals intended to deliver system reliability. The proposal to introduce a capacity payment mechanism being considered for Great Britain is reviewed against these criteria. This work has been accepted by the IEEE for publication.
Beyond Capacity Markets- Delivering Capability Resources to Europe’s Decarbonised Power System
March 26, 2012
- By
- Meg Gottstein ,
- Simon Skillings