Hogan, M., Weston, F., and Gottstein, M. (2015). Power Market Operations and System Reliability in the Transition to a Low-Carbon Power System: A Contribution to the Market Design Debate. Brussels, Belgium: The Regulatory Assistance Project. Retrieved from http://www.raponline.org/
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This paper describes how wholesale electricity markets can be adapted to match the needs of a decarbonizing power system to the prevailing expectations for power system reliability. It discusses the market rules, market design, and market operations that enable a secure, reliable transition to a low-carbon power system. Section 3 of the paper focuses on the investment challenge in conventional generation, and analyzes the design considerations for capacity mechanisms to deliver resource adequacy and ensure a least-cost mix of resources.
To gain a deeper understanding of capacity markets and their design principles, and alternative market design models to deliver least-cost reliability in power systems with high shares of renewable energy, please refer to the “related publications” listed at the end of the paper.