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
14 - Conclusion
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
After two decades in which they have grown tremendously in size, importance, and complexity, capacity markets are due for a comprehensive reassessment. The analysis in this book challenges several of the core assumptions on which capacity markets rest:
1. There is no consensus regarding the missing money theory used to justify capacity markets.
2. The use of forward capacity markets appears to lead to systematic errors in forecasting electricity demand, inducing capacity markets to procure excess capacity and impose excess costs on consumers.
3. Both regional transmission organizations (RTOs) and FERC seem fixated on concerns that capacity prices are too low, despite strong evidence that prices are higher than necessary.
4. Capacity markets have become increasingly and inexorably complex, due in significant part to regulatory accretion that undermines the role of market forces.
5. The widespread use of an engineering-based reliability standard based on a fixed risk-of-outage metric is ill-suited to the goal of reliability.
- Type
- Chapter
- Information
- Electricity Capacity Markets , pp. 252 - 266Publisher: Cambridge University PressPrint publication year: 2022
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