Article ID Journal Published Year Pages File Type
707125 The Electricity Journal 2007 17 Pages PDF
Abstract

In the absence of a properly functioning electricity demand side, well-designed capacity payment mechanisms hold more promise for signaling the value of capacity than non-CPM alternatives. Locational CPMs that rely on market-based principles, such as forward capacity auctions, are superior to cost-based payments directed to specific must-run generators, as CPMs at least provide a meaningful price signal about the economic value of resources to potential investors.

Related Topics
Physical Sciences and Engineering Energy Energy Engineering and Power Technology
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