Abstract

Having characterised the conditions for optimal investment in generation resources, Chapter 10 explores whether private for-profit generation entrepreneurs have an incentive to make efficient investment decisions. This leads to a discussion of concerns with energy-only markets and the missing money problem. The chapter then explores the impact of price caps on the incentives for investment, which leads to a discussion of the role for capacity markets and capacity payments. The chapter concludes with a discussion of the impact of time-averaging of network charges on the incentives for generation investment.

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