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The impact of investors’ risk aversion on the performances of capacity remuneration mechanisms

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This paper analyses the impact of risk aversion on the performances of capacity remuneration mechanisms, with
investors facing an uncertain peak load. Three market designs are studied for this purpose: a competitive energyonly
market, a capacity market and a strategic reserve mechanism. A simulation model based on system dynamics
is developed in order to represent investment decisions and analyse the behaviour of each market design.
Risk aversion is modelled through the computation of Conditional Value at Risk. The results are discussed in
terms of impact on the reliability (ability to limit shortages) and cost (total generation costs) of the studied
market designs. When comparing the three market designs, the capacity market seems to be the least affected by
the introduction of risk aversion, both in terms of cost and reliability. This result suggests that implementing a
capacity market is preferable in order to deal with the adverse effects of risk aversion, given the simulations and
parameters that were used.

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Ketersediaan

EJ20161

My Library

Tersedia

Informasi Detil

Judul Seri

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No. Panggil

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Penerbit

Elsevier Ltd. : ., 2018

Deskripsi Fisik

14 p.

Bahasa

English

ISBN/ISSN

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Klasifikasi

NONE

Tipe Isi

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Tipe Media

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Tipe Pembawa

online resource

Edisi

Energy Policy 112 (2018) 84–97

Subyek

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Info Detil Spesifik

Ejurnal

Pernyataan Tanggungjawab

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Versi lain/terkait

Lampiran Berkas

Komentar

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