The Future of Capacity Constructs
The Electricity Consumers Resource Council (ELCON) invited Mike Hogan to speak on the future of capacity markets at its spring workshop. Mr. Hogan recommends three ways capacity markets should change in order to improve reliability and promote investment in flexible, low-carbon energy sources. Capacity markets are expected to decline in importance as the performance of energy and ancillary services markets improves and the role of demand-side resources grows. As the value of resource flexibility increases, we will continue to see capacity markets actively differentiate between flexible and inflexible capacity resources. Finally, capacity markets will evolve toward a strategic reserve service due to evolving views of what is considered “adequate” and improvements in the effectiveness of energy markets.