Electricity Capacity Markets

The first comprehensive analysis of capacity markets, an increasingly important and controversial component of electricity markets.

Todd S. Aagaard (Author), Andrew N. Kleit (Author)

9781108489652, Cambridge University Press

Hardback, published 3 March 2022

300 pages
23.5 x 15.8 x 2.1 cm, 0.55 kg

'Capacity auctions are notoriously complicated due to their ever-changing rules and regional variations. Aagaard and Kleit bring much-needed clarity. Their work meticulously describes and critiques the fundamental elements of capacity auction design, from their theoretical underpinnings to their most recent rules that obstruct states' clean energy policies.' Ari Peskoe, Harvard Law School Environmental and Energy Law Program

Initially created as afterthoughts to competitive electricity markets, capacity markets were intended to enhance system reliability. They have evolved into massive, highly controversial, and poorly understood billion-dollar institutions. Electricity Capacity Markets examines the rationales for creating capacity markets, how capacity markets work, and how well these markets are meeting their objectives. This book will appeal to energy experts and non-experts alike, across a range of disciplines, including economics, business, engineering, public policy, and law. Capacity markets are an important and provocative topic on their own, but they also offer an interesting case study of how well our energy systems are meeting the needs of our increasingly complex society. The challenges facing capacity markets – harnessing market forces for social good, creating networks that manage complexity, and achieving sustainability – are very much core challenges for our twenty-first century advanced industrial society.

1. Introduction
2. Capacity markets primer
3. Restructured electricity markets and regional transmission organizations
4. Reliability and the 'missing money' problem
5. Capacity policies
6. First-generation capacity markets
7. Second-generation capacity markets
8. Capacity market demand
9. Capacity market supply
10. Capacity market design
11. Market power
12. Minimum offer price rules
13. The Texas alternative
14. Conclusion.

Subject Areas: Environment law [LNKJ], Energy & natural resources law [LNCR], International environmental law [LBBP], Environmental economics [KCN], Central government policies [JPQB]