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Energy Prices, Not Capacity Mechanisms, are Key to Ensuring Reliability at the Lowest Cost

Electricity generators often claim that prices cannot fully reflect the value of the reliability they offer the market. Hence they insist they need separate capacity payments to justify investments. But according to Mike Hogan, the current energy market design is fully able to reflect the value of reliability, even if it doesn’t always do so…

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Capacity, Competition, and Consumers Top RAP’s List of Missing Market Priorities

The European Commission’s Market Design Initiative (MDI) rightly identifies investment and security of supply, demand-side participation in markets, and market governance as three central pillars of a successful market reform. In framing the initiative’s priorities, however, the Commission has neglected some of the most important obstacles to success in each of these three critical areas….

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Reliability Standard: I Do Not Think it Means What you Think it Means

Much like the character Inigo Montoya who, in the movie The Princess Bride questions Vizzini’s relentless repetition of the word “inconceivable,” I find myself wondering whether many of those who insist over and over again that the EPA’s Clean Power Plan (CPP) will “threaten reliability” actually understand how we’ve gone about setting, interpreting, and enforcing different…

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Do Pay-for-Performance Capacity Markets Deliver the Grid Resiliency Outcomes We Need?

Competitive wholesale power markets are designed to sustain needed investment through market participants hedging risks in response to transparent pricing in the energy and ancillary services markets. But in practice, it’s been a challenge to realize market prices fully reflective of actual market conditions. Is the money and risk exposure needed to drive investment “missing”…