Hardback : £81.95
Initially created as afterthoughts to competitive electricity markets, capacity markets were intended to enhance system reliability. They have evolved into massive, highly controversial, and poorly understood billion-dollar institutions. Electricity Capacity Markets examines the rationales for creating capacity markets, how capacity markets work, and how well these markets are meeting their objectives. This book will appeal to energy experts and non-experts alike, across a range of disciplines, including economics, business, engineering, public policy, and law. Capacity markets are an important and provocative topic on their own, but they also offer an interesting case study of how well our energy systems are meeting the needs of our increasingly complex society. The challenges facing capacity markets - harnessing market forces for social good, creating networks that manage complexity, and achieving sustainability - are very much core challenges for our twenty-first century advanced industrial society.
Initially created as afterthoughts to competitive electricity markets, capacity markets were intended to enhance system reliability. They have evolved into massive, highly controversial, and poorly understood billion-dollar institutions. Electricity Capacity Markets examines the rationales for creating capacity markets, how capacity markets work, and how well these markets are meeting their objectives. This book will appeal to energy experts and non-experts alike, across a range of disciplines, including economics, business, engineering, public policy, and law. Capacity markets are an important and provocative topic on their own, but they also offer an interesting case study of how well our energy systems are meeting the needs of our increasingly complex society. The challenges facing capacity markets - harnessing market forces for social good, creating networks that manage complexity, and achieving sustainability - are very much core challenges for our twenty-first century advanced industrial society.
1. Introduction; 2. Capacity markets primer; 3. Restructured electricity markets and regional transmission organizations; 4. Reliability and the 'missing money' problem; 5. Capacity policies; 6. First-generation capacity markets; 7. Second-generation capacity markets; 8. Capacity market demand; 9. Capacity market supply; 10. Capacity market design; 11. Market power; 12. Minimum offer price rules; 13. The Texas alternative; 14. Conclusion.
The first comprehensive analysis of capacity markets, an increasingly important and controversial component of electricity markets.
Todd Aagaard is Professor of Law at the Villanova University Charles Widger School of Law. He teaches and writes in environmental law, energy law, and administrative law. Prior to becoming an academic, he worked as an attorney in the Justice Department's Environment and Natural Resources Division. Andrew N. Kleit is Professor of Energy and Environmental Economics and the founding director of the program in Energy Business and Finance at Penn State University. His writings have examined competition issues in the energy sector. He has worked for several government agencies, including the Federal Energy Regulatory Commission and the Federal Trade Commission.
'Incentives to invest in electricity supply are crucial to
successful market design. Introducing in rich detail both US
experience and the academic literature, Professors Aagaard and
Kleit provide essential background for identifying the reforms
needed to make capacity markets efficient and effective in this
rapidly evolving industry.' Benjamin F. Hobbs, Theodore M. and Kay
W. Schad Professor of Environmental Management, The Johns Hopkins
University
'Aagaard and Kleit's Electricity Capacity Markets is a
comprehensive and insightful discussion of the history, regulation,
and economics of capacity markets in the eastern US RTOs. The
authors identify many important tradeoffs in market design as well
as opportunities to expand the role of economics in future
incarnations. It is an invaluable resource for students,
regulators, and market participants alike. I highly recommend it.'
Karen Palmer, Director of the Future of Power Initiative, Resources
for the Future
'Electricity Capacity Markets provides compelling insights into the
rationales and performance of capacity markets. The authors' call
for a comprehensive assessment of these constructs is acutely
felicitous. Now, at the apex of controversy, it is imperative to
improve capacity markets for a reliable, innovative and
cost-effective clean energy transition.' Devin Hartman, Director of
Energy and Environmental Policy, R Street Institute
'Capacity auctions are notoriously complicated due to their
ever-changing rules and regional variations. Aagaard and Kleit
bring much-needed clarity. Their work meticulously describes and
critiques the fundamental elements of capacity auction design, from
their theoretical underpinnings to their most recent rules that
obstruct states' clean energy policies.' Ari Peskoe, Harvard Law
School Environmental and Energy Law Program
'This book is very timely. It is also much needed, given the vacuum
of resources around capacity markets … [it] is highly readable and
a useful resource. I highly recommend it for capacity market
practitioners and economists who want to learn more about the
implementation of the markets.' Sylwia Bialek, The Energy
Journal
'Aagaard and Kleit provide a readable, informative, and insightful
critique of electricity capacity markets. [The book] lays out the
major questions and issues surrounding these controversial and
ever-changing policy markets using a combination of economic,
legal, and empirical reasoning. No book will end the debate
regarding capacity markets, but this one has advanced it.' Frank A.
Felder, The Electricity Journal
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