Capacity Payments in Restructured Markets under Low and High Penetration Levels of Renewable Energy
- National Renewable Energy Lab. (NREL), Golden, CO (United States)
Growing levels of variable renewable energy resources arguably create new challenges for capacity market designs, because variable renewable energy suppresses wholesale energy prices while providing relatively little capacity. This effect becomes more pronounced the higher the variable renewable energy penetration in a market. The purpose of this report is threefold. First, we provide a brief outline of the purpose and design of various capacity markets using administratively determined capacity demand curves. Second, we discuss some of the main challenges raised in existing literature and a set of interviews that we conducted with market participants, regulators, and observers. Third, we consider some of the challenges to capacity markets that arise with higher variable renewable energy penetration.
- Research Organization:
- National Renewable Energy Laboratory (NREL), Golden, CO (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE), Energy Analysis (EI-30)
- OSTI ID:
- 1333042
- Report Number(s):
- NREL/TP-6A20-65491; 7529
- Country of Publication:
- United States
- Language:
- English
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