A quantitative evaluation of capacity remuneration mechanisms in Europe

William Zappa, Teun Mulder, Martin Junginger, Machteld Van Den Broek

Research output: Chapter in Book/Report/Conference proceedingConference contributionAcademicpeer-review

Abstract

© 2018 IEEE. With the growing penetration of zero-marginal-cost wind and solar photovoltaics leading to falling electricity wholesale prices in the energy-only market, several European countries have implemented capacity remuneration mechanisms (CRMs) in an attempt to ensure security of supply (SoS). However, the literature is far from conclusive whether CRMs are indeed a necessary and/or cost-effective way of ensuring SoS. In this study, we quantitatively compare three different market designs under different levels of wind and PV growth for the interconnected systems of Germany, France, Belgium and the Netherlands. Preliminary results show that average electricity prices decrease in markets supplemented with a CRM, as does the volatility of electricity prices. Whether or not the contribution of a CRM to SoS is worth the cost (and its possible adverse impact on energy market functioning) of implementing a CRM also remains to be evaluated.
Original languageEnglish
Title of host publication2018 15th International Conference on the European Energy Market, EEM
PublisherIEEE
DOIs
Publication statusPublished - Jun 2018
EventInternational Conference on the European Energy Market (EEM) - Lodz, Poland
Duration: 27 Jun 201829 Jun 2018

Publication series

NameInternational Conference on the European Energy Market, EEM
ISSN (Print)2165-4077

Conference

ConferenceInternational Conference on the European Energy Market (EEM)
Country/TerritoryPoland
CityLodz
Period27/06/1829/06/18

Keywords

  • Power generation economics
  • Power system economics
  • Power system reliability
  • Power system simulation

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