Analysis of capacity auctions parameters

Abstract

Security of electricity supply has an increasing importance in societies as they are becoming highly dependent on electricity. There are a many aspects that bring uncertainty to the availability of generation capacity. As a result, many countries are implementing different mechanism to address the security of supply problem. An adequate definition of the capacity market’s parameters is a key element to achieve the needed capacity and to guarantee that not only there will be enough capacity to comply with the reliability standards but also that this capacity will reflect the most efficient and optimal technology mix for the system. The main objective is to analyse the influence of the capacity market’s elements on the final investments and technology mix of the system. This analysis is based on a simplified model of a power system with an long term scope (40 years) that will be able to assess energy and capacity costs for a given mix technology production, load curve and minimum energy margin reserve. This model will be the base to study different scenarios to expand capacity when necessary so it could be obtain the pseudo-optimal solution of the parameters considered