Transition to a Capacity Auction: A Case Study of Ireland

IAEE Energy Forum, Third Quarter 2019

Författare: Ewa Lazarczyk and Lisa Ryan

Transition to a Capacity Auction: A Case Study of Ireland Ewa Lazarczyk and Lisa Ryan

Modern electricity markets are characterized by increasing shares of intermittent production which has almost zero marginal costs. The effect of introducing large amounts of cheap power into the system is known as the merit order effect – a shift of a supply curve to the right which delivers lower equilibrium prices. The lower prices and the fact that fossil-fuel generators are used less often exacerbate adequacy problems – there is a threat that not enough generating capacity will be available in the system since generators´ revenues are low and investment needs are not met. This and the fact that energy markets are often capped in order to prevent market power leads to the so called “missing money problem” (Teirila and Ritz, 2018, Bublitz et al., 2019). One possible remedy is to supplement the energy only markets with capacity markets (Newbery, 2016; Cramton et al, 2013; Joskow, 2007).


Lazarczyk, Ewa and Lisa Ryan (2019), "Transition to a Capacity Auction: A Case Study of Ireland", IIEA Energy Forum, Third Quarter, 2019.

Aktuell forskare

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Ämnesområden: Entreprenörskap, Tillväxt.


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