Expert survey on capacity markets in the US: Lessons for the EU. (February 2016)

• Record Type: Journal Article
• Authors: Bhagwat, Pradyumna C.; de Vries, Laurens J.; Hobbs, Benjamin F.
• Is Part Of: Utilities policy. Volume 38(2016)
• Page Start: 11
• Page End: 17
• Publication Date: 2016-02
• Subjects: Adequacy policy -- Capacity markets -- Electricity markets -- Electricity networks; Public utilities -- United States -- Periodicals; Public utilities -- Government policy -- United States -- Periodicals; 363.6
• DOI: 10.1016/j.jup.2015.11.005
• Languages: English
• ISSNs: 0957-1787

Abstract

Abstract: We present a survey of US capacity market experts with the purpose of drawing lessons for the EU. Of the respondents, 41% advised EU member states against implementing capacity markets, while the remaining were neutral or provided suggestions for improving capacity markets. Cross-border effects are currently not a concern but may become so in the future. Imports may dampen prices in a capacity market, but neighbouring markets may also experience pressure to implement a capacity market. The capacity markets in the USA were believed to have achieved their goals with respect to reliability, but in an economically inefficient manner. Highlights: Survey of experts on US capacity markets. Use of energy-only markets over capacity markets is recommended for the EU. Cross-border effects are not a concern but may become so in the future. US capacity markets have achieved their goals, but inefficiently.