Litterature Review CrM

Published:

University of Paris Dauphine - PSL

PaperType of modelMarket areaDesign criteriaMarket powerUncertaintyInvestment cycl.EfficiencyCrossborderHigh RESFlexible Res.CRM TypologySource of riskActorsActor   asymmetry Information   asymmetryRisk aversionTechnologyCost typeLead timePenaltyIndustrial   decisionsEOMCapacity marketModel   resolutionForward   capacity auctionCapacity   productClearing EOMClearing CRMPublication
Abani et al. (2016)SDhypothetical--yesyes----CM - SR------------- ---Abani, A.O., Hary, N., Rious, V.,   Saguan, M., 2018. The impact of investors’ risk aversion on the performances   of capacity remuneration mechanisms. Energy Policy 112, 84–97.   https://doi.org/10.1016/j.enpol.2017.10.008.
Abani et al. (2018)SDhypothetical--yesyesyes---CMDemand / EOMProducers--CVARPeakO&M / I(k)Yes-Entry Exit-PPC4 stages ( Forecast / CRM / Decision   / EOM )4 years1 year-Uniform Price / Multi Unit / seal bidAbani, A.O., Hary, N., Saguan, M.,   Rious, V., 2016. Risk aversion and generation adequacy in liberalized   electricity markets: benefits of capacity markets. 2016 13th Inter-tio-l   Conference on the European Energy Market (EEM). pp. 1–5. https:// doi.org/10.1109/EEM.2016.7521264.
Allcott (2012)AnalytiquePJMyes---yes---CM-C-Producers / ConsumersIncumbents / New Entry / RTP   consumers / Flat rates consumers --Peak / Mid / Basec / I(k)--CapacityPPCPPCProfit maximisation -Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidAllcott, H. (2012). Real-time pricing   and electricity market design.
Assili et al. (2008)SDhypothetical---yes----CPDemandProducers---Peak / Mid / Basec / I(k)Yes-Entry ExitPPC-Decision loop -Uniform Price / Multi Unit / seal bid-Assili, M., Javidi, D.B., Hossein,   M., Ghazi, R., 2008. An improved mechanism for capacity payment based on   system dy-mics modeling for investment planning in competitive electricity   environment. Energy Policy 36, 3703–3713. https://doi. org/10.1016/j.enpol.2008.06.034.
Astier et Lambin (2019)Analytiquehypotheticalyes-yes-----SR - RODemand / marg, costProducers / Consumers-yes-Single------Profit maximisation ---Nicolas Astier et Xavier Lambin, «   Ensuring Capacity Adequacy in Liberalised Electricity markets », The Energy   Jour-l, vol. 40, n° 3, mai 2019.
Bajo Buenestado (2017)AnalytiqueTexas (ERCOT)-yes--yes---CPDemandProducersPartial monopoly / Stackelberg--Peak / Basec / I(k)--CapacityFabra-2 stages ( Decision / EOM ) -Uniform Price / Multi Unit / seal bid-Bajo-Buenestado, R., 2017. Welfare   implications of capacity payments in a pricecapped electricity sector: a case   study of the Texas market (ERCOT). Energy Econ. 64, 272–285.   https://doi.org/10.1016/j.eneco.2017.03.026.
Barrosso et al (2008)Optimizationhypothetical--yes------MultipleProducers--CVARMultiple---Capacity--Decision loop ----
Bhagwat et al. (2017a)Agent-Basedhypothetical based on Germany--yesyes--yes-CMMultipleProducers---Multiplec / O&M / I(k)Yes-Entry ExitPPCPPC4 stages ( Debt / CM / Decision / EOM   ) 1 yearUniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidBhagwat, P.C., Iychettira, K.K.,   Richstein, J.C., Chappin, E.J., de Vries, L.J., 2017a. The effectiveness of   capacity markets in the presence of a high portfolio share of renewable   energy sources. Util. Policy 48, 76–91. https://doi.org/10.1016/j.jup. 2017.09.003.
Bhagwat et al. (2017b)Agent-Basedhypothetical based on the United   Kingdom--yesyes----CMDemand / FuelProducersIncumbent / New Entrant--Multiplec / O&M / I(k)Yes-Entry ExitPPCPPC4 stages ( Debt / CM / Decision / EOM   )1 year / 4 years1 year / Multi yearsUniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bid   for both Annuel et Multi Annuel ContractsBhagwat, P.C., Marcheselli, A.,   Richstein, J.C., Chappin, E.J., de Vries, L.J., 2017b. An a-lysis of a   forward capacity market with long-term contracts. Energy Policy 111, 255–267.   https://doi.org/10.1016/j.enpol.2017.09.037.
Briggs and Kleit (2013)Analytiquehypothetical-yes--yes---CPDemandProducers---Peak / Basec / I(k)--CapacityPPC / CournotPPC / CournotProfit maximisation -Uniform Price / Multi Unit / seal bid-Briggs, R.J., Kleit, A., 2013.   Resource adequacy reliability and the impacts of capacity subsidies in   competitive electricity markets. Energy Econ. 40, 297–305. https://   doi.org/10.1016/j.eneco.2013.07.009.
Brown, D., (2018)Analytiquehypotheticalyes-yes-yes---CMCapacity Demand / EOMProducersPartial monopoly--SingleO&M / I(k)--Entry-M.U.A.2 stages ( CM / EOM ) --Uniform Price / Multi Unit / seal bidBrown, D. P. (2018). The effect of   subsidized entry on capacity auctions and the long-run resource adequacy of   electricity markets. Energy Economics, 70, 205–232.   https://doi.org/10.1016/j.eneco.2018.01.002
Brown, D., (2018)Analytiquehypotheticalyes---yes---CMCapacity Demand / EOMProducers / Public Auth.Partial monopoly / Stackelberg--Singlec / I(k)--Capacity / MothballingM.U.A.M.U.A.6 stages ( Public Auth. / Invest /   Decision / CM / EOM ) -Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidBrown, D.P., 2018. Capacity payment   mechanisms and investment incentives in restructured electricity markets.   Energy Econ. 74, 131–142.
Cepeda and Finon  (2011)SDhypothetical--yesyes----CMDemand / Invest. UnavailabilityProducers---Peak / Mid / Basec / I(k)YesYesEntry ExitPPCPPC4 stages ( Forecast / CM / Decision /   EOM )3 years1 yearUniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidCepeda, M., Finon, D., 2011.   Generation capacity adequacy in interdependent electricity markets. Energy   Policy 39, 3128–3143. https://doi.org/10.1016/j.enpol.2011. 02.063.
Cepeda and Finon (2013)SDhypothetical based on France------yesyesCMMultipleProducers---Peak / Mid / Basec / I(k)YesYesEntry ExitPPCPPC4 stages ( Forecast / CM / Decision /   EOM )3 years1 yearUniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidCepeda, M., Finon, D., 2013. How to   correct for long-term exter-lities of large-scale wind power development by a   capacity mechanism? Energy Policy 61, 671–685.   https://doi.org/10.1016/j.enpol.2013.06.046.
Christiansen PN (2016)Stochastichypothetical----yes--yesCM-Producers / ConsumerssFlexible / Non flexible--Peak / Basec / I(k)--CapacityPPCPPCOptimization -Dual PricesDual Prices Christiansen PN. Equilibrium modeling of a   power market with a capacity market designed to promote flexible capacity.   NTNU; 2016
Creti and Fabra (2007)Analytiquehypothetical----yes---CMDemandProducers / Public Auth.Monopole--SingleK--CapacityPPC / monopolyPPC / monopoly3 stages ( Public Auth. / CM / EOM ) ---Creti, A., Fabra, N., 2007. Supply   security and short-run capacity markets for electricity: why an ICAP   mechanism is needed as part of standard market design. Energy Econ. 29,   259–276. https://doi.org/10.1016/j.eneco.2006.04.007.
Ehrenmann and Smeers (2011)Stochastichypothetical-yesyes-----CMFuel / RegulationProducers--CVARPeak / Mid / BaseO&M / I(k) / CO2--EntryPPC-2 stages ( Decision / EOM ) ---Ehrenmann, A., Smeers, Y., 2011.   Generation capacity expansion in a risky environment: a stochastic   equilibrium a-lysis. Oper. Res. 59,
Elberg, C., & Kranz, S.   (2013)Analytiquehypotheticalyesyesyes-yes---CMDemandProducersPartial monopoly--Singlec / I(k)--EntryM.U.A.Cournot2 stages ( CM / EOM ) -Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidElberg, C., & Kranz, S. (2013).   Capacity Mechanisms and Effects on Market Structure. (14), 1–21.
Fabra (2018)Analytiquehypothetical-yesyes-yes---CMDemandProducersPartial monopolyyes--K--EntryPPCPPC / Partial monopoly2 stages ( Decision / EOM ) -Uniform Price / Multi Unit / seal bidExogène : fixé par le First Best Sol.Fabra N. A primer on capacity   mechanisms. Energy Econ. 2018;75:323-335.
Fan et al. (2012)Stochastichypothetical--yes-----CMDemand / RegulationProducersIncumbent / New Entrant-Utility functionPeak / Mid / EnRc / O&M / I(k) / CO2--Entry CapacityPPC-2 stages ( Decision / EOM ) -Dual PricesDual PricesFan, L., Norman, C.S., Patt, A.G.,   2012. Electricity capacity investment under risk aversion: a case study of   coal, gas, and concentrated solar power. Energy Econ. 34, 54–61.   https://doi.org/10.1016/j.eneco.2011.10.010.
Franco et al. (2015SDGreat Britain---yes----CMMultipleProducers---Multiplec / O&M / I(k)Yes-Entry ExitPPCPPC4 stages ( Forecast / CM / Decision /   EOM ) -Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidFranco, C.J., Castaneda, M., Dyner,   I., 2015. Simulating the new British electricitymarket reform. Eur. J. Oper.   Res. 245, 273–285. https://doi.org/10.1016/j.ejor. 2015.02.040.
Genoese et al. (2012)Agent-Basedhypothetical based on Spain----yes---CP-Producers / Consumers / Public Auth.---Multiplec / O&M / I(k) / CO2--CapacityPPC-Decision loop -Uniform Price / Multi Unit / seal bid-Genoese, M., Genoese, F., Fichtner,   W., 2012. Model-based a-lysis of the impact of capacity markets on   electricity markets. 2012 9th Inter-tio-l Conference on the European Energy   Market (EEM 2012). pp. 1–6. https://doi.org/10.1109/EEM. 2012.6254704.
Geze (2013)Agent-BasedFrance--yes-----CMDemand / FuelProducers / Consumers--Mean VarianceMultiple---Entry-PPCDecision loop --Uniform Price / Multi Unit / seal bid-
Gurkan et al (2013)Stochastichypoothetical--yes-----CMDemandProducers / Consumers / Public Auth.---Multiplec / I(k)--CapacityPPCPPC2 stages ( Decision / EOM )  -Dual PricesDual PricesGurkan, G., Ozdemir, O., &   Smeers, Y. (2013). Generation Capacity Investments in Electricity Markets:   Perfect Competition. Ssrn. https://doi.org/10.2139/ssrn.2314862
Hach et al. (2016)SDGreat Britain-yes------CMDemandProducersRamping Rates--Multiplec / O&M / I(k) / CO2--Entry ExitPPCPPCConverging price 1 year / Multi yearsUniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidHach, D., Chyong, C.K., Spinler, S.,   2016. Capacity market design options: a dy-mic capacity investment model and   a GB case study. Eur. J. Oper. Res. 249, 691–705.   https://doi.org/10.1016/j.ejor.2015.08.034.
Hasani and Hosseini (2013)SDhypothtical--yesyes----CPDemandProducersRaming rates--Peak / Mid / Basec / O&M / I(k)Yes-Entry ExitPPCPPCDecision loop -Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidHasani, M., Hosseini, S., “Dy-mic   assessment of capacity  investment  in    electricity  market  considering    complementary capacity mechanisms”. Energy, vol.36, 2011, pp 277-293
Hobbs et al. (2007)SDhypotheticalyes-yes-----CMDemandProducers--Utility functionPeakKYes-Entry-PPCDecision loop4 years1 year-Uniform Price / Multi Unit / seal bidHobbs, B.F., Hu, M.-C., Inon, J.G.,   Stoft, S.E., Bhavaraju, M.P., 2007. A dy-mic a-lysis of a demand curve-based   capacity market proposal: the PJM reliability pricing model. IEEE Trans.   Power Syst. 22, 3–14. https://doi.org/10.1109/TPWRS.2006. 887954.
Höschle et al. (2017)StochasticBelgium----yes---CM-Producers / Consumers / Public Auth.---Peak / Mid / Base / EnRc / I(k)--CapacityPPCPPCOptimization--Dual PricesDual PricesHöschle, H., de Jonghe, C., Le Cadre,   H., Belmans, R., 2017. Electricity markets for energy, flexibility and   availability – impact of capacity mechanisms on the remuneration of   generation technologies. Energy Econ. 66, 372–383. https://doi.org/ 10.1016/j.eneco.2017.06.024.
Joskow and Tirole (2007Analytiquehypothetical-yesyes-yes---CPDemandProducers / Consumers---Peak / Basec / I(k)--CapacityPPC / Cournot-Profit maximisation--Uniform Price / Multi Unit / seal bid-Joskow, P., Tirole, J., 2007.   Reliability and competitive electricity markets. RAND J. Econ. 38, 60–84.   https://doi.org/10.1111/j.1756-2171.2007.tb00044.x.
Joung, M., Baldick, R., Kim,   J. (2009)Analytiquehypotheticalyesyesyes-----CM-Producers / Public Auth.-yes-Single--Yes--CournotNash equilibrium---Uniform Price / Multi Unit / seal bidJoung, M., Baldick, R., & Kim, J.   (2009). Strategic behavior in electricity capacity markets. Proceedings of   the 42nd Annual Hawaii Inter-tio-l Conference on System Sciences, HICSS, 1–6.   https://doi.org/10.1109/HICSS.2009.404
Khalfallah (2009)Stochastichypothetical--------CM - RODemandProducersStackelberg--Peak / Mid / Basec / I(k)YesYesCapacityCournotCournot3 stages ( Decision / CM / EOM )--Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidKhalfallah, M. H. (2009). A Game   Theoretic Model for Generation Capacity Adequacy in Electricity Markets: A   Comparison between Investment Incentive Mechanisms. Ssrn.   https://doi.org/10.2139/ssrn.1405291
Kim and Kim (2012) StochasticSouth Korea----yes---CMDemandPublic Auth.---Multiplec / I(k)--CapacityPCCPPCOptimization--Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidKim, H., Kim, S.-S., 2012. The   resource adequacy scheme in the Korean electricity market. Energy Policy 47,   133–144. https://doi.org/10.1016/j.enpol.2012.04.035. Kwoka, J., Madjarov,   K., 2007. Making markets work: the special case of electricity. Electr. J.   20, 24–36. https://doi.org/10.1016/j.tej.2007.10.008.
Kraft E. (2017)Agent-BasedFrance--yes-yes---CMMultipleProducers / Consumers / Public Auth.---Multiplec / O&M / I(k)Yes-Entry ExitPCCPPCDecision loop--Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidKraft E. (2017) Modelling a   Decentralised Capacity Markets
Léautier (2016)Analytiquehypothetical-yesyes-yes---CM - RODemandProducers / Consumers RTP consumers / Flat rates consumers --Singlec / I(k)-YesEntryPPC / CournotCournot3 stages ( Decision / CM / EOM )--Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidLéautier, T.-O., 2016. The visible   hand: ensuring optimal investment in electric power generation. Energy J. 37,   https://doi.org/10.5547/01956574.37.2.tlea.
LeCadre, H., Soubra, M.   (2014)Analytiquehypotheticalyesyes--yes--yesCM-Producers / Consumers / Public Auth.Stackelberg / Exogenous preferencesyes-Multiplec-YesCapacityPPC / Stackelberg-4 stages ( Decision Prod, EOM Prod,   Decision Demand, EOM Demand )--Dual PricesDual PricesHélène Le Cadre, Michaël Soubra.   Designing Rules for the Capacity Market. [Research Report] Working Paper   2013-03-10, Chaire Modélisation prospective au service du développement   durable. 2013, pp.36 - Les Cahiers de la Chaire.
Lynch andDevine (2017Stochastichypothetical----yes---C¨PInvest. UnavailabilityProducers---Peak / Mid / Basec / O&M / I(k) / Refurbushment--Entry Exit / RefurbishmentPPCPPCOptimisation--Dual PricesDual PricesLynch, M.Á., Devine, M.T., 2017.   Investment vs. refurbishment: examining capacity payment mechanisms using   stochastic mixed complementarity problems. Energy J. 38,   https://doi.org/10.5547/01956574.38.2.mlyn.
Maere d’Aertrycke et al.   (2017)Stochastichypothetical--yes-yes---CM - RODemand / Invest. UnavailabilityProducers / Consumerss--CVARPeak / Basec / I(k)--CapacityPPCPPC2 stages ( Décision / EOM )----de Maere dAertrycke, G., Ehrenmann,   A., Smeers, Y., 2017. Investment with incomplete markets for risk: the need   for long-term contracts. Energy Policy 105, 571–583.   https://doi.org/10.1016/j.enpol.2017.01.029. de Sisternes, F.J., Parsons,   J.E., 2016. The Impact of Uncertainty on the Need and Design of Capacity   Remuneration Mechanisms in Low-carbon Power Systems.
Mastropietro, P., et al   (2016)Agent-Basedhypotheticalyes-yes-yes---CMInvest. UnavailabilityProducersIncumbent / New Entrant--PeakK-YesEntryPPCPPCCost minimization scenario--Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidMastropietro, P., Herrero, I.,   Rodilla, P., Batlle, C., 2016. A model-based a-lysis on the impact of   explicit pe-lty schemes in capacity mechanisms. Appl. Energy 168, 406–417.   https://dx.doi.org/10.1016/j.apenergy.2016.01.108.
McRaey, S., Wolak, F., (2019)AnalytiqueColombie-yes------RO-ProducersPartial monopoly--Peak / Base----Cournot-Profit maximisation--Uniform Price / Multi Unit / seal bid-McRae, S., Wolak, F. A. (2019).   Market power and incentive-based capacity payment mechanisms. 1–44.
Meyer and Gore (2015)Analytiquehypothetical-yes--yesyes--RO - SRDemandProducers---Multiplec / I(k)--ExitMarkupPPCProfit maximisation----Meyer, R., Gore, O., 2015.   Cross-border effects of capacity mechanisms: do uncoordi-ted market design   changes contradict the goals of the European market integration? Energy Econ.   51, 9–20. https://doi.org/10.1016/j.eneco.2015.06. 011.
Milstein I, Tishler A. (2019)Analytiquehypothetical-yesyes-yes---CPDemandProducers---Singlec / I(k)--EntryCournot-2 stages ( Decision / EOM )--Dual PricesDual PricesMilstein I, Tishler A. On the effects   of capacity payments in competitive electricity markets: Capacity adequacy,   price cap, and reliability. Energy Policy. 2019;129(February):370-385.   doi:10.1016/j.enpol.2019.02.028
Petitet (2017)SDhypothetical--yes-yes---CM-----------------Petitet, M, 2017. Effects of risk   aversion on investment decisions in electricity generation: What consequences   for market design.
Schneider et al (2017)Analytiquehypothetical-yes--yes---CMDemandProducers / Consumers---Singlec---CournotCournotProfit maximisation--Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidForward Contracts and Generator   Market Power: How Exter-lities Reduce Benefits in Equilibrium. Ian Schneider,   Audun Botterud, and Mardavij Roozbehani. Proceedings of the US Association   for Energy Economics, 2017. Presentation Slides, November 2017. 
Schwenen (2014)Analytiquehypothetical-yes--yes--yesCMDemandProducers------YesCapacityM.U.A.M.U.A.2 stages ( CM / EOM )--Uniform Price / Multi Unit / seal bidUniform Price / Multi Unit / seal bidSchwenen, S., 2014. Market design and   supply security in imperfect power markets. Energy Econ. 43, 256–263.   https://doi.org/10.1016/j.eneco.2014.02.012.
Schwenen (2015)AnalytiqueNew York (ICAP)yes-------CM-Producers-------Capacity-M.U.A.Profit maximisation---Uniform Price / Multi Unit / seal bidSchwenen, S., 2015. Strategic bidding   in multi-unit auctions with capacity constrained bidders: the New York   capacity market. RAND J. Econ. 46, 730–750. https://doi.   org/10.1111/1756-2171.12104.
Teirila, J. (2017)AnalytiqueIrlande-yesyes-yes---RO-ProducersFringe comp.--Multiplec / I(k)--Entry ExitPPC / CournotPPC / Cournot3 stages ( Decision / CM / EOM )--Uniform Price / Multi Unit / seal bidDescending clock auctionTeirila, J. (2017) Market Power in   the Capacity Market? The Case of Ireland, Cambridge Working Paper in   Economics, 1727
Traber (2017)StochasticGermany, France, and Poland----yes---SR - CMDemandProducers / Consumers---Multiplec / I(k)--CapacityPPCPPCProfit maximisation--Dual PricesDual PricesTraber, T., 2017. Capacity   remuneration mechanisms for reliability in the integrated European   electricity market: effects on welfare and distribution through 2023. Util.   Policy 46, 1–14. https://doi.org/10.1016/j.jup.2016.10.005.
Winzer (2013)Agent-BasedGreat Britain--yes-yes---CP - RODermandeProducers / Public Auth.-yesMean VarianceMultiplec / I(k)--EntryPPC-Decision loop--Uniform Price / Multi Unit / seal bid-Winzer, C., 2013. Robustness of   various capacity mechanisms to regulatory errors. 2013 10th Inter-tio-l   Conference on the European Energy Market (EEM). pp. 1–7.   https://doi.org/10.1109/EEM.2013.6607374.
Peluchon (2019)StochasticHypothetical--yes-yes---CM-----------------Benoît Peluchon (EDF), « Market   Design and the Cost of Capital for Generation Capacity Investment »
Feng et Xu (2009)AnalytiqueChi---yes-yes---CMDemandProducers / Public Auth.-yesUtility functionPeak / Mid / Basec / O&M / I(k)-Yes-PPCPPCProfit maximisation----D. Feng and Z. Xu, "Risk a-lysis   of volume cheat strategy in a competitive capacity market," 2009 IEEE   Power & Energy Society General Meeting, Calgary, AB, 2009, pp. 1-7.