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Capacity remuneration mechanisms in the European market: now but how?

Author

Listed:
  • Arthur Henriot
  • Jean-Michel Glachant

Abstract

This article addresses the functioning of capacity remuneration mechanisms (CRMs) in an integrated European electricity market featuring a high share of intermittent renewable energy sources. We first highlight the close ties between flexibility provision and generation adequacy, and explain why these two issues must be considered concomitantly when developing CRMs. We then show that while Member States have different needs, addressing security of supply in a purely national way will be expensive. We finally identify three prerequisites for a workable Europeanization of national generation adequacy mechanisms: a consistent assessment of adequacy needs and cross-border resources, a dedicated method to allocate risks and remuneration of cross-border resources contribution, and a definition of rights over the system resources at times of extreme scarcity.

Suggested Citation

  • Arthur Henriot & Jean-Michel Glachant, 2014. "Capacity remuneration mechanisms in the European market: now but how?," RSCAS Working Papers 2014/84, European University Institute.
  • Handle: RePEc:rsc:rsceui:2014/84
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    Citations

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    Cited by:

    1. Glachant, Jean-Michel, 2016. "Tacking stock of the EU “Power Target Model”… and steering its future course," Energy Policy, Elsevier, vol. 96(C), pages 673-679.
    2. Selim nay & Ahmet Y cekaya & Ay e Bilge & Esra A ca Aktun, 2021. "A Supply and Demand Analysis for the Turkish Electricity Market: Supply Adequacy and Resource Utilization," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 315-327.
    3. Ordoudis, Christos & Delikaraoglou, Stefanos & Kazempour, Jalal & Pinson, Pierre, 2020. "Market-based coordination of integrated electricity and natural gas systems under uncertain supply," European Journal of Operational Research, Elsevier, vol. 287(3), pages 1105-1119.

    More about this item

    Keywords

    Capacity remuneration mechanisms; Security of Supply; Flexibility; Integrated Energy Market;
    All these keywords.

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