Abstract
This paper analyzes the impact of effective competition on the supply security problem in the German electricity market. Based on the energy-only resource adequacy mechanism utilized in ERCOT, effective competition is defined by two major elements. The first element is active demand-side participation in the market and the second one is defining optimal price cap in the market to achieve efficient scarcity prices. Then, a dynamic model is proposed and different scenarios of effective competition are applied to two different market designs; energy-only market and energy market with capacity payments. Results show that increasing the price cap to approach to the Value of Lost Load (VOLL) and higher levels of demand-side participation in the market reduce the risk of generation inadequacy and mitigate the supply security problem in the investigated electricity market. Also, utilizing effective competition in energy markets with capacity payment mechanism triggers more investment in comparison with energy-only markets.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
