Experience with Capacity Markets - Lessons for Germany and Europe
Approximately 50 stakeholders considered the challenges facing German’s power sector at a conference hosted by German financial media company, Handelsblatt. RAP Senior Advisor, Mike Hogan, discussed wholesale energy market design and highlighted RAP’s recent paper, “What Lies Beyond Capacity Markets?” in his presentation. Mr. Hogan shared his expertise on global experience and best practices for wholesale market design aimed at delivering least-cost supply security under the new resource paradigm. Germany, in particular, is addressing nuclear phase-out and a substantial increase in variable renewables. On a global scale, the ultimate aim for energy market regulators is to find the set of rules and practices that efficiently and reliably delivers the right amount and the right mix of resources. More precisely, how do regulators design wholesale markets to ensure supply security without undermining competitive markets, without locking in all the wrong resources, without creating excessive windfall profits for existing generators, and without prohibitively high renewables integration costs? Mr. Hogan addresses these issues of resource adequacy, transmission, investment incentives, and reliability in his presentation.