Aagaard T. Electricity Capacity Markets 2022

Textbook in PDF format

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.
Introduction
Capacity Markets Primer
Restructured Electricity Markets and Regional Transmission Organizations
Reliability and the Missing Money Problem
Capacity Policies
First-Generation Capacity Markets
Second-Generation Capacity Markets
Capacity Market Demand
Capacity Market Supply
Capacity Market Design
Market Power
Minimum Offer Price Rules
The Texas Alternative
Conclusion