Date: 2019
Type: Working Paper
Reliability options: can they deliver on their promises?
Working Paper, EUI RSCAS, 2019/21, Florence School of Regulation, Energy, Electricity
BHAGWAT, Pradyumna, MEEUS, Leonardo, Reliability options: can they deliver on their promises?, EUI RSCAS, 2019/21, Florence School of Regulation, Energy, Electricity - https://hdl.handle.net/1814/61965
Retrieved from Cadmus, EUI Research Repository
Capacity mechanisms have been controversial in theory as well as practice. Lessons from experience with different capacity mechanisms led to the development of the reliability options. This mechanism promises two advantages over other types of capacity mechanisms. Firstly, it ensures the availability of capacity contracted via the capacity mechanism during scarcity. Secondly, the reliability option mechanism limits any energy market distortion due to its implementation and provides the consumer a hedge from high prices. We assess the ability of reliability options in delivering the two promises by analysing the reliability option designs in Italy and Ireland. We find that they deliver on the first promise but only partly on the second.
Cadmus permanent link: https://hdl.handle.net/1814/61965
ISSN: 1028-3625
Series/Number: EUI RSCAS; 2019/21; Florence School of Regulation; Energy; Electricity
Publisher: European University Institute
Keyword(s): Adequacy policy Capacity mechanisms Reliability options