This Website uses cookies. By using this website you are agreeing to our use of cookies and to the terms and conditions listed in our data protection policy. Read more

Energy Economics

Equilibrium Supply Security in a Multinational Electricity Market with Renewable Production

Scientific Article in English
Reference
Tangerås, Thomas (2018). “Equilibrium Supply Security in a Multinational Electricity Market with Renewable Production”. Energy Economics 72, 416–435. doi.org/10.1016/j.eneco.2018.04.002

Author
Thomas Tangerås

An increasing reliance on variable renewable energy has raised concern about system ability to continuously satisfy electricity demand. This paper examines countries’unilateral incentives to achieve supply security through capacity reserves and market integration in a multinational electricity market. Capacity reserves protect consumers against blackouts and extreme prices, but distort the market. Market integration reduces supply imbalances, but requires network investment. Equilibrium capacity reserves can be too high or low, but network investment is always insu¢ cient relative to the total welfare maximizing level. Capacity reserves are smaller when there are …nancial markets or when aimed at solving domestic supply constraints.

Thomas Tangerås

+46 (0)8 665 4526
+46 (0)70 727 5448
thomas.tangeras@ifn.se