Chapter 12

Decentralized Reliability Options: Market Based Capacity Arrangements

Stephen Woodhouse    Pöyry Management Consulting, Oxford, UK


In the European power markets with fast-growing wind and solar generation, there is a growing trend for national capacity remuneration schemes (CRMs). These risk undermining the integrated European electricity market. Reliability options (ROs) would be less distorting, but existing RO designs assume a single “spot” market, whereas European electricity markets have physical day-ahead, continuous intraday, and balancing markets. The author describes a novel decentralized RO model for use in European markets. The chapter concludes that decentralized ROs may be a more appropriate form of CRM for European ...

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