Forward contracts in electricity markets and capacity investment: A simulation study

Karla C. Álvarez-Uribe, Santiago Arango-Aramburo*, Erik Reimer Larsen

*Corresponding author af dette arbejde

Publikation: Bidrag til tidsskrift/Konferencebidrag i tidsskrift /Bidrag til avisTidsskriftartikelForskningpeer review

8 Citationer (Scopus)

Abstract

This simulation study analyzes the effect of the introduction of forward markets to mitigate cyclical price behavior in electricity markets from a dynamic extended Cobweb model. We pay particular attention to the effect of lags in investment decisions and the effect of not fully replacing retired capacity in electricity markets. In line with previous research, the introduction of forward markets decreases price variability in comparison to a spot market. However, we also observe that lags in investment decisions and the failure to fully replace retired capacity create capacity investments cycles even in the presence a forward market.

OriginalsprogEngelsk
TidsskriftUtilities Policy
Vol/bind54
NummerOctober
Sider (fra-til)1-10
Antal sider10
ISSN0957-1787
DOI
StatusUdgivet - 2018

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