Resource adequacy in decarbonizing power systems: Lessons learned from both sides of the Atlantic

Abstract

Resource adequacy mechanisms are becoming a pillar of power sector regulation during the energy transition. In this chapter, we identify, review, and discuss the key design elements of resource adequacy mechanisms, extracting guidelines from international experiences on both sides of the Atlantic. Among the topics analysed in this chapter, there are the identification of the buying and the selling sides in the market, the level of centralization, the definition of the reliability product, the identification of scarcity conditions, the design of de-rating methodologies, the lag period and duration of capacity contracts, and performance incentives. Based on this analysis, the chapter provides guidelines for all the countries where similar mechanisms are currently under discussion and presents high-level recommendations.

Resource adequacy mechanisms are becoming a pillar of power sector regulation during the energy transition. In this chapter, we identify, review, and discuss the key design elements of resource adequacy mechanisms, extracting guidelines from international experiences on both sides of the Atlantic. Among the topics analysed in this chapter, there are the identification of the buying and the selling sides in the market, the level of centralization, the definition of the reliability product, the identification of scarcity conditions, the design of de-rating methodologies, the lag period and duration of capacity contracts, and performance incentives. Based on this analysis, the chapter provides guidelines for all the countries where similar mechanisms are currently under discussion and presents high-level recommendations.