Newsletter 07 | 19.07.2011

Market Information – »Capacity Markets: A New Market Design for Power Generation?«
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MARKET INFORMATION

Capacity Markets: A New Market Design for Power Generation?

The recent decision to phase out the use of nuclear energy will result in a significant reduction in power plant capacity until 2022. Due to this, studies predict a temporary deficit of power plant capacity to the extent of 1,000 MW, particularly in southern Germany. In this context, the German Federal Network Agency is considering interventions in order to secure adequate reserve capacity in the generation sector. While the capacity coverage situation throughout Germany will ease again due to the planned construction of new power plants, local deficits are possible in southern Germany even beyond 2013. In the long term, the extension of renewable energy capacities will reduce the incentives to build new conventional power plants –without contributing to the secured capacity to the same extent. The subject of this article is, how a mechanism should be designed, that can create economically efficient and, if necessary, locally differentiated incentives for the construction of new conventional power plant capacity.pdf-download »
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