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Journal articlePublication Year
2019Journal
The Electricity JournalPublication Volume
32Publication Issue
10
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Capacity mechanisms have been controversial in theory as well as practice. Lessons from experience with different capacity mechanisms led to the development of the reliability options. This mechanism promises two advantages over other types of capacity mechanisms. Firstly, it ensures the availability of capacity contracted via the capacity mechanism during scarcity. Secondly, the reliability option mechanism limits any energy market distortion due to its implementation and provides the consumer a hedge from high prices. We assess the ability of reliability options in delivering the two promises by analysing the reliability option designs in Italy and Ireland. We find that they deliver on the first promise but only partly on the second.Knowledge Domain/Industry
Special Industries : Energyae974a485f413a2113503eed53cd6c53
10.1016/j.tej.2019.106667