Uncertainty is a major hindrance to attracting investment for the energy transition. Yet European market design is mainly discussed with a focus on short-term efficiency. Based on computational results from market models for gas and power we derive lessons on the importance of contracts and the implications of incomplete markets. Specifically, we show that short-term…
Tag: Long-term contracts
European Electricity Market Reforms: The “Visible Hand” of Public Coordination
The paper investigates how proposed reforms on policies to maintain generation adequacy and to encourage clean technology investments in a number of European countries, modify the role of the market. This is reduced as the government, regulator and system operator take on explicit responsibility through the introduction of capacity mechanisms and long-term support for clean…
Contracting for Wind Generation
The UK Government proposes offering long-term Feed-in-Tariffs (FiTs) to low-carbon generation to reduce risk and encourage new entrants. Their preference is for a Contract-for-Difference (CfD) for all generation regardless of type. I argue that a standard CfD is unsuitable for on-shore wind, where a fixed FiT appears less risky. The estimated extra trading and balancing…