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dc.contributor.authorNeuhoff, Karstenen_GB
dc.contributor.authorde Vries, Laurensen_GB
dc.date.accessioned2004-06-16T16:05:47Z
dc.date.available2004-06-16T16:05:47Z
dc.date.created2004-05en_GB
dc.date.issued2004-06-16T16:05:47Z
dc.identifier.urihttp://www.dspace.cam.ac.uk/handle/1810/407
dc.identifier.urihttps://www.repository.cam.ac.uk/handle/1810/407
dc.description.abstractIn theory, competitive electricity markets can provide incentives for efficient investment in generating capacity. We show that if consumers and investors are risk averse, investment is efficient only if investors in generating capacity can sign long-term contracts with consumers. Otherwise the uncovered price risk increases financing costs, reduces equilibrium investment levels, distorts technology choice towards less capital-intensive generation and reduces consumer utility. We observe insufficient levels of long-term contracts in existing markets, possibly because retail companies are not credible counter-parties if their final customer can switch easily. With consumer franchise, retailers can sign long-term contracts, but this solution comes at the expense of the idea of retail competition. Alternative capacity mechanisms to stimulate investment are discussed.en_GB
dc.format.extent734227 bytes
dc.format.mimetypeapplication/pdfen_GB
dc.format.mimetypeapplication/pdf
dc.language.isoen_GB
dc.publisherFaculty of Economics
dc.relation.ispartofseriesCambridge Working Papers in Economics
dc.rightsAll Rights Reserveden
dc.rights.urihttps://www.rioxx.net/licenses/all-rights-reserved/en
dc.subject.otherinvestment, electricity, consumer utility, long-term contractsen_GB
dc.titleInsufficient Incentives for Investment in Electricity Generationen_GB
dc.typeWorking Paperen
dc.identifier.doi10.17863/CAM.5405


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