Working Paper Series
Equilibrium Supply Security in a Multinational Electricity Market with Renewable Production
Abstract: An increasing reliance on solar and wind power has raised
concern about system ability to consistently satisfy electricity demand.
This paper examines countries’ unilateral incentives to achieve supply
security through capacity reserves and market integration in a
multinational electricity market. Capacity reserves protect consumers
against blackouts and extreme prices, but distort consumption and
investment. Market integration alleviates supply constraints, but requires
costly network reinforcement. Capacity reserves can be up- or downward
distorted, but network investment is always insufficient in equilibrium.
Capacity reserves are smaller when there are fi…nancial markets or when
dispatched solely to resolve domestic supply constraints.
Keywords: Capacity mechanism; Decentralized policy making; Multinational electricity market; Network investment; Security of supply; (follow links to similar papers)
JEL-Codes: D24; H23; L94; Q48; (follow links to similar papers)
38 pages, April 11, 2017, Revised May 5, 2017
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom