Book contents
- Electricity Capacity Markets
- Electricity Capacity Markets
- Copyright page
- Contents
- Figures
- 1 Introduction
- 2 Capacity Markets Primer
- 3 Restructured Electricity Markets and Regional Transmission Organizations
- 4 Reliability and the Missing Money Problem
- 5 Capacity Policies
- 6 First-Generation Capacity Markets
- 7 Second-Generation Capacity Markets
- 8 Capacity Market Demand
- 9 Capacity Market Supply
- 10 Capacity Market Design
- 11 Market Power
- 12 Minimum Offer Price Rules
- 13 The Texas Alternative
- 14 Conclusion
- Index
- References
7 - Second-Generation Capacity Markets
Published online by Cambridge University Press: 24 February 2022
Book contents
- Electricity Capacity Markets
- Electricity Capacity Markets
- Copyright page
- Contents
- Figures
- 1 Introduction
- 2 Capacity Markets Primer
- 3 Restructured Electricity Markets and Regional Transmission Organizations
- 4 Reliability and the Missing Money Problem
- 5 Capacity Policies
- 6 First-Generation Capacity Markets
- 7 Second-Generation Capacity Markets
- 8 Capacity Market Demand
- 9 Capacity Market Supply
- 10 Capacity Market Design
- 11 Market Power
- 12 Minimum Offer Price Rules
- 13 The Texas Alternative
- 14 Conclusion
- Index
- References
Summary
By the mid-2000s, the shortcomings of the first-generation capacity markets had become clear. Each of the three Northeast regional transmission organizations accordingly replaced its first-generation capacity market with a significantly more robust second-generation capacity market. Whereas first-generation capacity auctions merely supplemented the traditional capacity procurement mechanisms of self-supply and bilateral purchases, second-generation capacity auctions reflected a vision of capacity markets as a distinctive policy for sending corrective price signals to incentivize investment in generation. Unfortunately, FERC did not take advantage of this opportunity to consider deeper questions about capacity markets, such as in what circumstances capacity markets are appropriate and how they compare to other available policy options for achieving reliability.
- Type
- Chapter
- Information
- Electricity Capacity Markets , pp. 92 - 106Publisher: Cambridge University PressPrint publication year: 2022
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