Capacity Markets: NonSense or Necessity?
Résumé
Capacity market implementation is controversial due to the speculations observed in the US. We model the capa-city market as a multi-level game. First, we prove that it admits a unique equilibrium in prices, quantities of traded energy and investment. Second, we design a feedback mechanism where a principal can complement the investments already performed by the generators to meet the demand and deliver certificates to the generators' capacity production. Finally, simulation enables us to optimize the market design to reach efficient outcomes.