Book contents
- Electricity Capacity Markets
- Electricity Capacity Markets
- Copyright page
- Contents
- Figures
- 1 Introduction
- 2 Capacity Markets Primer
- 3 Restructured Electricity Markets and Regional Transmission Organizations
- 4 Reliability and the Missing Money Problem
- 5 Capacity Policies
- 6 First-Generation Capacity Markets
- 7 Second-Generation Capacity Markets
- 8 Capacity Market Demand
- 9 Capacity Market Supply
- 10 Capacity Market Design
- 11 Market Power
- 12 Minimum Offer Price Rules
- 13 The Texas Alternative
- 14 Conclusion
- Index
- References
8 - Capacity Market Demand
Published online by Cambridge University Press: 24 February 2022
Book contents
- Electricity Capacity Markets
- Electricity Capacity Markets
- Copyright page
- Contents
- Figures
- 1 Introduction
- 2 Capacity Markets Primer
- 3 Restructured Electricity Markets and Regional Transmission Organizations
- 4 Reliability and the Missing Money Problem
- 5 Capacity Policies
- 6 First-Generation Capacity Markets
- 7 Second-Generation Capacity Markets
- 8 Capacity Market Demand
- 9 Capacity Market Supply
- 10 Capacity Market Design
- 11 Market Power
- 12 Minimum Offer Price Rules
- 13 The Texas Alternative
- 14 Conclusion
- Index
- References
Summary
Regional transmission organizations (RTOs) administratively create capacity market demand curves derived from three components: the capacity requirement based on forecasted peak demand plus an additional margin, the Net Cost of New Entry based on the cost of new facilities entering the market, and the shape of the demand curve. The processes that RTOs use to generate these components depend on stakeholder negotiations, lack theoretical or analytical justification, and tend to produce biased results. There is thus little reason to believe that capacity market demand reflects the actual value of capacity.
- Type
- Chapter
- Information
- Electricity Capacity Markets , pp. 107 - 138Publisher: Cambridge University PressPrint publication year: 2022
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