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2018-06-08 | Peer Reviewed

Towards long-term economic welfare in deregulated electricity markets: Testing capacity mechanisms in an experimental setting

Lara-Arango, David, Santiago Arango Aramburo and Erik R Larsen. 2017. “Towards long-term economic welfare in deregulated electricity markets: Testing capacity mechanisms in an experimental setting.” The Electricity Journal 30:6: 53-71.
Download reference Doi:https://doi.org/10.1016/j.tej.2017.06.001

A number of mechanisms have been suggested for capacity adequacy. A study using laboratory experiments both of procurement of long-term strategic reserve contracting and of centralized auctioning for capacity contracts suggests that the centralized auctioning process stabilizes laboratory markets and provides economic welfarecomparable to a free market. The strategic reserve contracting process does not seem to improve either of the two aspects compared to a non-regulated market.