View Full Document

Ensuring Generation Adequacy in Competitive Electricity Markets



View the full content.
View Full Document
View Full Document

30 views

Unformatted text preview:

Energy Policy and Economics 007 Ensuring Generation Adequacy in Competitive Electricity Markets Shmuel S Oren June 2003 This paper is part of the University of California Energy Institute s UCEI Energy Policy and Economics Working Paper Series UCEI is a multi campus research unit of the University of California located on the Berkeley campus UC Energy Institute 2547 Channing Way Berkeley California 94720 5180 www ucei org This report is issued in order to disseminate results of and information about energy research at the University of California campuses Any conclusions or opinions expressed are those of the authors and not necessarily those of the Regents of the University of California the University of California Energy Institute or the sponsors of the research Readers with further interest in or questions about the subject matter of the report are encouraged to contact the authors directly Ensuring Generation Adequacy in Competitive Electricity Markets12 Shmuel S Oren3 University of California at Berkeley Revised June 3 2003 Abstract This paper discusses alternative approaches that have been adopted around the world for guaranteeing the appropriate level of investment in electric generation capacity We argue that long term reserves should be viewed as price insurance and be treated as a private good However political realities and asymmetries and distortions in risk management incentives may necessitate imposition of mandatory levels of such insurance on load serving entities Furthermore centralized markets may be needed as a supplement to bilateral contracting in order to facilitate efficient procurement of such insurance and to bridge the gap between the needs of generators and load serving entities with regard to duration of hedging instruments We discuss the origins and shortcomings of capacity payments and capacity obligations and explain how long term supply contracts in the form of call options with premiums that depend on the contracts strike prices can



Access the best Study Guides, Lecture Notes and Practice Exams

Loading Unlocking...
Login

Join to view Ensuring Generation Adequacy in Competitive Electricity Markets and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Ensuring Generation Adequacy in Competitive Electricity Markets and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?