Provision of reserve capacity on the Nordic electricity market: Principles and practises
System reliability is a key aspect of electricity supply, and the ability to maintain system reliability thus is an important aspect of a liberalised electricity market. But system reliability can be ensured only if there is sufficient reserve capacity at all times. In a liberalised electricity market the provision of reserve capacity is a matter of incentives. The Nordic electricity market, comprising of 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 reserve capacity have been strong enough. The reason for this is an adequate institutional design point. 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 wellfunctioning.
|Date of creation:||31 Jan 2006|
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- Hobbs, Benjamin F. & Iñón, Javier & Stoft, Steven E., 2001. "Installed Capacity Requirements and Price Caps: Oil on the Water, or Fuel on the Fire?," The Electricity Journal, Elsevier, vol. 14(6), pages 23-34, July.
- von der Fehr, N-H.M. & Amundsen , E.S. & Bergman, L., 2005.
"The Nordic Market: Signs of Stress?,"
Cambridge Working Papers in Economics
0525, Faculty of Economics, University of Cambridge.
- Abbott, Malcolm, 2001. "Is the Security of Electricity Supply a Public Good?," The Electricity Journal, Elsevier, vol. 14(7), pages 31-33.
- Amundsen, Eirik S. & Bergman, Lars, 2005. "Why has the Nordic electricity market worked so well?," Working Papers in Economics 18/05, University of Bergen, Department of Economics.
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