One of the major challenges faced by power systems is to maintain a level of generation capacity that ensures an acceptable level of certainty against power interruptions. A power market with a well-functioning spot market and long-term markets for allocation of risks between consumers and producers should in theory generate optimal investments in new power generation capacity. However, this may not always be the case. The problem for market design is that this capacity will need to be properly remunerated even though on average it will only run for a few hours a year.
The coming increase in intermittent generation presents two major challenges: firstly, adjusting the output from conventional plant to match a more variable net demand, and secondly, paying for a larger volume of rarely needed reserve plant. A further challenge is that renewable generation is not evenly distributed in Northern Europe, and because of existing transmission bottlenecks it could lead to increased price volatility in some areas.
Under ideal conditions electricity markets in Northern Europe, as they are designed today, should provide efficient outcomes both in the short and in the longer term. There is, however, a lack of scientific agreement on whether or not this is the most efficient solution when practical issues are taken into account. This is reflected in the fact that there are many different electricity market designs throughout the world.
One problem when discussing capacity markets is that different actors have very different perceptions of what a market model with a capacity mechanism should look like. The purpose of this seminar is to gather stakeholders from different North European countries to discuss how a market model that includes a capacity market for the North European electricity market could be designed, if politicians decide that such model is desirable.
The purpose of this Seminar is to bring insight into the current scientific debate on capacity markets and to create a platform for discussion.
The Seminar is a collaboration between the German energy company EnBW and Market Design .
Welcome!
Bernd-Michael Zinow, Senior Vice President Public Affairs EnBW AG
Jörg Jasper, Group Expert Energy Economics EnBW AG
Peter Fritz, project leader Market Design