Year: 2005
Type: article
Abstract: There is no academic consensus on which electricity market design provides the least distorting investment incentives. Theory suggests that "energy-only market" can allow capacity cost recovery by generators. However, separate payments for capacity or reserve obligations do not need to rely on infrequent price spikes to remunerate reserve capacity. Three years after the controversial change from the compulsory British Electricity Pool with capacity payments to the decentralised energyonly New Electricity Trading Arrangements (NETA), we contrast the two market designs in terms of investment incentives, analyse NETA's balancing market failures, and review the case for regulatory support for investment.
Source: Review of Network Economics
Institution: University of Cambridge
Language: English
Subfield: Electrical and Electronic Engineering
Field: Engineering
Domain: Physical Sciences
Open Access status: bronze
OpenAlex ID: W2021940559