Provision of operating reserve capacity: Principles and practices on the Nordic Electricity Market
AbstractSystem reliability is a key aspect of electricity supply, and the ability to maintain system reliability this is an important aspect of a liberalised electricity market. But system reliability can be ensured only if there is sufficient operating reserve capacity at all times. In a liberalised electricity market the provision of operating reserve capacity is a matter of incentives that should be formulated on basic principles of economic behaviour. The Nordic electricity market, comprising the integrated Danish, Finnish, Norwegian, and Swedish electricity markets, has worked well from a system reliability point of view. A key factor behind this favourable outcome is that the incentives for keeping sufficient operating reserve capacity have been strong enough. The reason for this is an adequate institutional design. More precisely the set of markets that is commonly called “the electricity market” includes both regulation and capacity markets, and rules and regulations are such that these markets are well-functioning.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 10861.
Date of creation: 2007
Date of revision:
Publication status: Published in Competition and Regulation in Network Industries (Intersentia) 1.Vol. 2(2007): pp. 73-98
Nordic electricity market; operating reserve capacity; peak capacity; capacity market;
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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