Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/183391 
Year of Publication: 
2017
Series/Report no.: 
IFN Working Paper No. 1162
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
An increasing reliance on solar and wind power has raised concern about system ability to consistently 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 consumption and investment. Market integration alleviates supply constraints, but requires costly network reinforcement. Capacity reserves can be up- or downward distorted, but network investment is always insufficient in equilibrium. Capacity reserves are smaller when there are financial markets or when dispatched solely to resolve domestic supply constraints.
Subjects: 
Capacity mechanism
decentralized policy making
multinational electricity market
network investment
security of supply
JEL: 
D24
H23
L94
Q48
Document Type: 
Working Paper

Files in This Item:
File
Size
284.29 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.