Jacob Mays Many liberalized electricity markets use capacity mechanisms to ensure that sufficient resources will be available in advance of operations. Recent events have called into question the ability of capacity mechanisms to provide sufficient incentives for reliability. A core resource adequacy challenge is that, given the high value of reliable electricity, penalties for non-performance on capacity … Read more
Operators of organized wholesale electricity markets attempt to form prices in such a way that the private incentives of market participants are consistent with a socially optimal commitment and dispatch schedule. In the U.S. context, several competing price formation schemes have been proposed to address the non-convex production cost functions characteristic of most generation technologies. … Read more
With wind and solar becoming major contributors to electricity production in many systems, wholesale market operators have become increasingly aware of the need to address uncertainty when forming prices. While implementing theoretically ideal stochastic market clearing to address uncertainty may be impossible, the use of operating reserve demand curves allows market designers to inject an … Read more