Biblioteca Digital de VanguardiaIncentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector
This paper studies resource adequacy, i.e. the market design dilemma of ensuring enough generation capacity in the long run. International experiences have shown that it is difficult that the market alone provides incentives to attract enough investment in capacity reserves. We analyze various measu...
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| Formato: | artículo científico |
| Lenguaje: | Inglés |
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Centro de Investigación y Docencia Económicas, A.C.
2009
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| Acceso en línea: | http://www.redalyc.org/articulo.oa?id=32312000004 http://biblioteca-repositorio.clacso.edu.ar/handle/CLACSO/82817 |
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| author | Víctor G. Carreón-Rodríguez Juan Rosellón |
| author_facet | Víctor G. Carreón-Rodríguez Juan Rosellón |
| author_sort | Víctor G. Carreón-Rodríguez |
| collection | Repositorio |
| description | This paper studies resource adequacy, i.e. the market design dilemma of ensuring enough generation capacity in the long run. International experiences have shown that it is difficult that the market alone provides incentives to attract enough investment in capacity reserves. We analyze various measures to cope with this problem, including moth-ball reserves, capacity payments, icap and call options. We then construct a model to analyze the structure of incentives for the expansion of electricity supply in the spot market, and capacity in the long run electricity reserve market. Through a game-theory model, we analyze price convergence in three markets: the peak spot market, the non-peak spot market, and the long-run capacity reserve market. We finally carry out a simulation for Mexican power generation. The combination of cfe´s virtual market, together with capacity payments, has eventually resulted in capacity generation expansion similar to what would be attained in an open electricity market, such as the one modelled in our study. But this does not necessarily imply that the Mexican electricity industry will not need in the future -if the generation market is fully open to private investment- some of the discussed capacity incentive mechanisms. |
| format | artículo científico |
| id | clacso-CLACSO82817 |
| institution | CLACSO, Repositorio Digital |
| language | Inglés |
| publishDate | 2009 |
| publisher | Centro de Investigación y Docencia Económicas, A.C. |
| record_format | greenstone |
| spelling | clacso-CLACSO828172022-03-22T16:07:27Z Incentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector Víctor G. Carreón-Rodríguez Juan Rosellón Economía y Finanzas Electricity generation resource adequacy capacity markets capacity payments capacity reserves Mexico This paper studies resource adequacy, i.e. the market design dilemma of ensuring enough generation capacity in the long run. International experiences have shown that it is difficult that the market alone provides incentives to attract enough investment in capacity reserves. We analyze various measures to cope with this problem, including moth-ball reserves, capacity payments, icap and call options. We then construct a model to analyze the structure of incentives for the expansion of electricity supply in the spot market, and capacity in the long run electricity reserve market. Through a game-theory model, we analyze price convergence in three markets: the peak spot market, the non-peak spot market, and the long-run capacity reserve market. We finally carry out a simulation for Mexican power generation. The combination of cfe´s virtual market, together with capacity payments, has eventually resulted in capacity generation expansion similar to what would be attained in an open electricity market, such as the one modelled in our study. But this does not necessarily imply that the Mexican electricity industry will not need in the future -if the generation market is fully open to private investment- some of the discussed capacity incentive mechanisms. 2009 2022-03-22T16:07:27Z 2022-03-22T16:07:27Z artículo científico http://www.redalyc.org/articulo.oa?id=32312000004 http://biblioteca-repositorio.clacso.edu.ar/handle/CLACSO/82817 en http://www.redalyc.org/revista.oa?id=323 Economía Mexicana. Nueva Época application/pdf Centro de Investigación y Docencia Económicas, A.C. Economía Mexicana. Nueva Época (México) Num.2 Vol.XVIII |
| spellingShingle | Economía y Finanzas Electricity generation resource adequacy capacity markets capacity payments capacity reserves Mexico Víctor G. Carreón-Rodríguez Juan Rosellón Incentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector |
| title | Incentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector |
| title_full | Incentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector |
| title_fullStr | Incentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector |
| title_full_unstemmed | Incentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector |
| title_short | Incentives for Supply Adequacy in Electricity Markets. An Application to the Mexican Power Sector |
| title_sort | incentives for supply adequacy in electricity markets. an application to the mexican power sector |
| topic | Economía y Finanzas Electricity generation resource adequacy capacity markets capacity payments capacity reserves Mexico |
| url | http://www.redalyc.org/articulo.oa?id=32312000004 http://biblioteca-repositorio.clacso.edu.ar/handle/CLACSO/82817 |