Equilibrium supply security in a multinational electricity market with renewable production
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Authors
Tangeras, T.
Publication Date
2017-04-10Series
Cambridge Working Papers in Economics
Publisher
Faculty of Economics
Type
Working Paper
Metadata
Show full item recordCitation
Tangeras, T. (2017). Equilibrium supply security in a multinational electricity market with renewable production. https://doi.org/10.17863/CAM.39162
Abstract
An increasing reliance on solar and wind power has raised concern about system ability to consistently satisfy electricity demand. This paper examines countries' unilateral incentives to achieve supply security through capacity reserves and market integration in a multinational electricity market. Capacity reserves protect consumers against blackouts and extreme prices, but distort consumption and investment. Market integration alleviates supply constraints, but requires costly network reinforcement. Capacity reserves can be up- or downward distorted, but network investment is always insufficient in equilibrium. Capacity reserves are smaller when there are financial markets or when dispatched solely to resolve domestic supply constraints.
Keywords
Capacity mechanism, decentralized policy making, multinational
Identifiers
CWPE1716
This record's DOI: https://doi.org/10.17863/CAM.39162
This record's URL: https://www.repository.cam.ac.uk/handle/1810/292009
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