As power systems transition toward higher renewable energy source (RES) penetration and increased flexibility needs, ensuring robust price signals for adequacy becomes increasingly important. The paper provides a comparative assessment of national approaches and evaluates their effectiveness in addressing the missing-money challenge.
Main insights:
- Scarcity pricing can enhance long-term adequacy and flexibility incentives when appropriately designed.
- Implementation models vary considerably across European jurisdictions.
- Aligning price caps with the Value of Lost Load (VoLL) is essential to maintain credible scarcity signals.
- In several nations, scarcity pricing functions concurrently with capacity mechanisms as a component of a comprehensive adequacy framework.
Access the full Report by Eryk Jakub Chojnacki, a Polish scholar at Washington and Lee University below.
Research Paper: Implementation of Scarcity Pricing Mechanisms in Select European Union Countries
1.03 MB