{"language":[{"iso":"eng"}],"main_file_link":[{"open_access":"1"}],"ddc":["330"],"file":[{"success":1,"file_id":"29762","file_name":"Capacity investments in a competitive energy market.pdf","content_type":"application/pdf","access_level":"closed","relation":"main_file","date_updated":"2022-02-07T12:21:13Z","date_created":"2022-02-07T12:21:13Z","creator":"lblock","file_size":1303356}],"date_updated":"2022-02-08T20:09:13Z","type":"working_paper","oa":"1","abstract":[{"lang":"eng","text":"We study the abilities of competitive markets to produce sufficient energy capacities to\r\nmeet a fixed energy demand. Renewable energy producers with stochastic outputs and no\r\nvariable costs compete against conventional energy producers with deterministic, pollutant\r\noutputs and increasing marginal costs. We find that either market forces are strong enough\r\nto serve the entire demand, or they are too weak such that the market fails and nothing is\r\nproduced. This crucially depends on the relative cost of renewable energy investments, such\r\nthat relatively cheap renewable energy causes the market to fail. Welfare analyses show that\r\nwith increasing levels of conventional energy pollution the ability of the market to produce\r\nan e\u001ecient outcome further declines. As a policy implication, our findings refute the use of\r\na strategic reserve as a blackout backstop solution. Instead, a capacity mechanism consisting\r\nof a tax-and-subsidy scheme can align the market outcome with the eficient solution for all\r\npollution levels and relative costs of renewable energy capacities."}],"author":[{"full_name":"Block, Lukas","last_name":"Block","id":"22527","first_name":"Lukas"},{"first_name":"Bastian","full_name":"Westbrock, Bastian","last_name":"Westbrock"}],"has_accepted_license":"1","status":"public","year":"2022","citation":{"bibtex":"@book{Block_Westbrock_2022, title={Capacity investments in a competitive energy market}, author={Block, Lukas and Westbrock, Bastian}, year={2022} }","short":"L. Block, B. Westbrock, Capacity Investments in a Competitive Energy Market, 2022.","chicago":"Block, Lukas, and Bastian Westbrock. <i>Capacity Investments in a Competitive Energy Market</i>, 2022.","mla":"Block, Lukas, and Bastian Westbrock. <i>Capacity Investments in a Competitive Energy Market</i>. 2022.","ama":"Block L, Westbrock B. <i>Capacity Investments in a Competitive Energy Market</i>.; 2022.","ieee":"L. Block and B. Westbrock, <i>Capacity investments in a competitive energy market</i>. 2022.","apa":"Block, L., &#38; Westbrock, B. (2022). <i>Capacity investments in a competitive energy market</i>."},"user_id":"22527","date_created":"2022-02-07T12:22:07Z","file_date_updated":"2022-02-07T12:21:13Z","_id":"29761","title":"Capacity investments in a competitive energy market","keyword":["Renewable versus conventional energy","capacity mechanisms","strategic reserves","capacity payments"]}