Cross-border effects of capacity mechanisms in interconnected power systems
BHAGWAT, Pradyumna ; RICHSTEIN, Jörn C.; CHAPPIN, Emile J. L.; IYCHETTIRA, Kaveri K.; DE VRIES, Laurens J.
Title: Cross-border effects of capacity mechanisms in interconnected power systems
Author: BHAGWAT, Pradyumna ; RICHSTEIN, Jörn C.; CHAPPIN, Emile J. L.; IYCHETTIRA, Kaveri K.; DE VRIES, Laurens J.
Citation: Utilities policy, 2017, OnlineFirst
The cross-border effects of a capacity market and a strategic reserve in interconnected electricity markets are modeled using an agent-based modeling methodology. Both capacity mechanisms improve the security of supply and reduce consumer costs. Our results indicate that interconnections do not affect the effectiveness of a capacity market, while a strategic reserve is affected negatively. The neighboring zone may free ride on the security of supply provided by the zone implementing a capacity mechanism. However, a capacity market causes crowding out of generators in the energy-only zone. A strategic reserve implemented by this region could aid in mitigating this risk.
Available online 31 March 2017. Open Access funded by VSNU (Association of universities in the Netherlands). Under a Creative Commons license 4.0 International
Type of Access: openAccess
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