159:
to avoid building its own spare generation capacity to satisfy the RA and instead purchase "ICAP credits" from some other company in the pool that already has such capacity (the probability of two companies falling below their RA targets simultaneously is considered to be negligible). The ICAP
179:, but complicated in case of hydropower and renewables, as the available energy from these sources tend to be highly correlated over a large geographical area. Incorporation of solar and wind generators into firm capacity frameworks presents challenges due to their intermittency (cf.
215:
does not immediately affect the consumption and becomes punitive. "Energy-only markets have the potential to result in an equilibrium point for the market that is not consistent with what users and regulators want to see", so every wholesale electricity market in the world relies on
243:(in the form of a lack of investment into generation facilities). Per Wolak, lower offer caps complicate the situation, as do the electrification of space heating, adoption of electric vehicles, and an increasing share of the
131:. These monopoly utilities had an incentive to overestimate the peak demand in order to build more capacity and justify an increase in their regulator-approved rates. Lack of capacity generally was not a problem.
79:, typically 1 day in 10 years. IRM is used to measure the adequacy of the generation capacity and serves as a guide to evaluate the needs for the capacity changes. When discussing the future capacity needs, the
207:
at market-determined prices. However, customers of electric utilities frequently do not have an ability to shift their consumption away from high-priced periods (consider, for example, the
175:
RA contracts for 110-120% of its annual peak power. As any capacity-based scheme, this approach relies on credible estimates of firm capacity. These estimates are easy for conventional
164:, which also requires the suppliers to offer all available resources on a day-ahead basis ("must-offer"). If a unit that received the ICAP payment is called upon, it must run.
96:
240:
212:
128:
139:
In a deregulated grid some sort of incentives are necessary for market participants to build and maintain generation and transmission resources that
622:
314:
143:
some day be called upon to maintain the grid balance, but most of the time are idled and do not produce revenue from the sale of electricity. An
84:
239:, while the rolling blackouts equally penalize the LSEs that did procure sufficient resources and the ones that did not. This results in a
203:
nature of electricity production is fairly typical among other industries that have no problems recovering production costs and generating
75:
Installed reserve margin (IRM) is the amount of the generating capacity in excess of the expected load, calculated to satisfy the
120:
522:
161:
611:
99:(ORM). The ORM calculations account for the current generation and transmission outages and assume that all the
646:
557:
64:
127:, done by the utility itself, additional expenses were negotiated with regulators that were representing the
124:
152:
40:
47:
at any time to accommodate major equipment failures (e.g., a disconnection of a nuclear power unit or a
538:
Long-Term
Resource Adequacy in Wholesale Electricity Markets with Significant Intermittent Renewables
536:
244:
52:
306:
76:
60:
176:
48:
223:
Wolak points to the combination of offer caps and electricity shortage mitigation strategies (
577:
195:
Electricity markets are quite unique in their need for an RA mechanism, even though the high
217:
204:
8:
602:
232:
168:
104:
598:
56:
585:
545:
224:
180:
100:
44:
589:
578:"Model-Limited Choice and the Determination of the Need for Generation Capacity"
55:
sources (e.g, wind dying down). The adequacy standard should satisfy the chosen
236:
184:
43:. For example, sufficient unused generation capacity shall be available to the
28:
640:
208:
200:
172:
92:
88:
32:
35:
to satisfy the end-user power demand at any time (typically an issue at the
558:"Too Much Is Never Enough: Constructing Electricity Capacity Market Demand"
227:) leading to the need for an RA mechanism (Wolak calls this dependency a
36:
196:
156:
582:
Regulating Power: The
Economics of Electricity in the Information Age
549:
108:
87:(NERC) by default uses the 15% reserve target for the mostly
155:
to maintain the RA requirements. ICAP allows a member of a
355:
343:
160:
obligation is called upon not by a purchaser, but by the
476:
474:
437:
435:
486:
386:
384:
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264:
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260:
420:
367:
333:
331:
498:
471:
459:
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432:
408:
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379:
257:
107:loads are connected. ORM is thus lower than IRM (
638:
328:
274:
114:
623:North American Electric Reliability Corporation
599:"PJM Manual 20: PJM Resource Adequacy Analysis"
315:North American Electric Reliability Corporation
85:North American Electric Reliability Corporation
235:(LSEs) to underpay for the electricity on the
555:
361:
349:
70:
231:): the price cap creates an incentive for
556:Aagaard, Todd; Kleit, Andrew N. (2022).
544:, National Bureau of Economic Research,
575:
292:
639:
211:needs). Under these circumstances the
121:vertically integrated electric utility
534:
530:. Stanford Washington Research Group.
520:
504:
492:
480:
465:
453:
441:
426:
414:
402:
390:
373:
268:
612:"2013 Summer Reliability Assessment"
609:
337:
95:ones. The IRM is different from the
596:
280:
190:
134:
13:
524:Resource Adequacy - Alphabet Soup!
521:Tezak, Christine (June 24, 2005).
162:regional transmission organization
14:
658:
183:) and might require the usage of
304:
584:. Springer US. pp. 77–97.
298:
145:installed capacity requirement
1:
535:Wolak, Frank A. (July 2021),
250:
167:Typical regulator requires a
115:Vertically integrated utility
83:term is used for the metric.
125:integrated resource planning
39:). RA is a component of the
7:
605:Resource Adequacy Planning.
590:10.1007/978-1-4615-3258-3_5
153:independent system operator
41:electrical grid reliability
10:
663:
514:
111:allows ORM as low as 3%).
245:variable renewable energy
53:variable renewable energy
571:(1). Washington: 79–124.
362:Aagaard & Kleit 2022
350:Aagaard & Kleit 2022
97:operating reserve margin
77:loss of load expectation
71:Installed reserve margin
61:loss of load expectation
597:PJM (August 25, 2021).
229:reliability externality
81:planning reserve margin
67:(so called "1-in-10").
49:high-voltage power line
576:Pechman, Carl (1993).
31:is the ability of the
647:Electricity economics
241:missing money problem
233:load-serving entities
91:systems, 10% for the
307:"M-1 Reserve Margin"
205:return on investment
177:dispatchable sources
169:load serving entity
123:RA was part of the
105:interruptible power
565:Energy Law Journal
151:) is used by some
27:) in the field of
610:NERC (May 2013).
225:rolling blackouts
129:captive customers
119:In the case of a
65:1 day in 10 years
57:reliability index
17:Resource adequacy
654:
633:
631:
629:
616:
606:
593:
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531:
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341:
335:
326:
325:
323:
321:
302:
296:
290:
284:
278:
272:
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213:scarcity pricing
191:Price cap and RA
135:Deregulated grid
59:, typically the
662:
661:
657:
656:
655:
653:
652:
651:
637:
636:
627:
625:
614:
560:
541:
527:
517:
512:
511:
503:
499:
495:, pp. 5–6.
491:
487:
479:
472:
464:
460:
452:
448:
440:
433:
425:
421:
413:
409:
401:
397:
389:
380:
376:, pp. 2–3.
372:
368:
360:
356:
348:
344:
336:
329:
319:
317:
303:
299:
291:
287:
279:
275:
267:
258:
253:
193:
181:Capacity credit
137:
117:
101:demand response
73:
51:) and drops in
45:electrical grid
25:supply adequacy
12:
11:
5:
660:
650:
649:
635:
634:
607:
594:
573:
553:
550:10.3386/w29033
532:
516:
513:
510:
509:
497:
485:
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458:
446:
431:
419:
407:
395:
378:
366:
354:
342:
327:
297:
285:
273:
255:
254:
252:
249:
237:forward market
220:in some form.
192:
189:
185:energy storage
136:
133:
116:
113:
72:
69:
29:electric power
9:
6:
4:
3:
2:
659:
648:
645:
644:
642:
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587:
583:
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570:
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547:
540:
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533:
526:
525:
519:
518:
506:
501:
494:
489:
482:
477:
475:
467:
462:
455:
450:
443:
438:
436:
429:, p. 10.
428:
423:
416:
411:
404:
399:
392:
387:
385:
383:
375:
370:
364:, p. 86.
363:
358:
352:, p. 89.
351:
346:
339:
334:
332:
316:
312:
308:
301:
295:, p. 77.
294:
289:
283:, p. 13.
282:
277:
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263:
261:
256:
248:
246:
242:
238:
234:
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219:
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209:space heating
206:
202:
201:marginal cost
198:
188:
186:
182:
178:
174:
173:firm capacity
170:
165:
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158:
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93:hydroelectric
90:
89:thermal power
86:
82:
78:
68:
66:
62:
58:
54:
50:
46:
42:
38:
34:
33:electric grid
30:
26:
22:
18:
626:. Retrieved
618:
581:
568:
564:
537:
523:
507:, p. 5.
500:
488:
483:, p. 6.
468:, p. 3.
461:
456:, p. 4.
449:
444:, p. 2.
422:
417:, p. 9.
410:
405:, p. 8.
398:
393:, p. 7.
369:
357:
345:
340:, p. 3.
318:. Retrieved
310:
300:
293:Pechman 1993
288:
276:
271:, p. 2.
228:
222:
194:
171:to purchase
166:
148:
144:
140:
138:
118:
80:
74:
24:
20:
16:
15:
37:peak demand
505:Wolak 2021
493:Wolak 2021
481:Wolak 2021
466:Tezak 2005
454:Wolak 2021
442:Wolak 2021
427:Wolak 2021
415:Wolak 2021
403:Wolak 2021
391:Wolak 2021
374:Tezak 2005
269:Tezak 2005
251:References
218:offer caps
197:fixed cost
157:power pool
63:(LOLE) of
338:NERC 2013
247:sources.
641:Category
628:10 April
619:nerc.com
320:10 April
311:nerc.com
281:PJM 2021
515:Sources
23:, also
305:NERC.
615:(PDF)
561:(PDF)
542:(PDF)
528:(PDF)
199:/low
109:CAISO
630:2023
322:2023
149:ICAP
103:and
603:PJM
586:doi
546:doi
141:may
643::
621:.
617:.
601:.
580:.
569:43
567:.
563:.
473:^
434:^
381:^
330:^
313:.
309:.
259:^
187:.
21:RA
632:.
592:.
588::
548::
324:.
147:(
19:(
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