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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.
List of contents
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.
About the author
Todd Aagaard is Professor of Law at the Villanova University Charles Widger School of Law. He teaches and writes in environmental law, energy law, and administrative law. Prior to becoming an academic, he worked as an attorney in the Justice Department's Environment and Natural Resources Division.Andrew N. Kleit is Professor of Energy and Environmental Economics and the founding director of the program in Energy Business and Finance at Penn State University. His writings have examined competition issues in the energy sector. He has worked for several government agencies, including the Federal Energy Regulatory Commission and the Federal Trade Commission.
Summary
Capacity markets are a large part of electricity markets, costing consumers billions of dollars and creating deep controversy. But understanding of capacity markets is severely limited, and they have rarely been examined in depth. This is the first comprehensive analysis of these markets and their economic, legal, and political aspects.
Foreword
The first comprehensive analysis of capacity markets, an increasingly important and controversial component of electricity markets.
