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  • Long Term Issues to be Addressed by Regulators in Liberalised Electricity Systems: Generation Adequacy and Indicative Planning. Justification, Available Mechanisms, and a Simulation Study on some Concrete Policies

Working paper / Energy

Long Term Issues to be Addressed by Regulators in Liberalised Electricity Systems: Generation Adequacy and Indicative Planning. Justification, Available Mechanisms, and a Simulation Study on some Concrete Policies

Author(s): LÓPEZ-PEÑA Álvaro, CENTENO Efraim, BARQUÍN Julián

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ABSTRACT

For ensuring electricity security of supply in the long run, liberalised electric systems’ regulators have to worry, not only about the presence of enough installed capacity, but also about the generation mix. Hence, indicative planning must be taken into account as well, for limiting dependence upon nonindigenous fuels, for instance. This can, simultaneously, help in meeting growing environmental constraints: renewables promotion is a clear example. There exist several mechanisms for addressing the adequacy problem (having enough megawatts) and for promoting renewables (having the good megawatts). In this study, a brief review of these mechanisms is done, and some are chosen for assessing their efficacy and efficiency over a system similar to the Spanish one, concretely capacity payments and capacity markets for the first problem and renewable energy premiums for the second. A simulation study is performed, which confirms the better characteristics of capacity markets in stabilising reserve margins, but whose effects may be damaged by an inadequate renewables promotion policy.