Energy prices, not capacity mechanisms, are key to ensuring reliability at the lowest cost

Electricity (photo Thomas Hawk)

Electricity generators often claim that prices cannot fully reflect the value of the reliability they offer the market. Hence they insist they need separate capacity payments to justify investments. But according to Mike Hogan of the Regulatory Assistance Project (RAP), the current energy market design is fully able to reflect the value of reliability, even if it doesn’t always do so in practice. In a new report, he describes a smarter approach, … [Read more...]

Why the EU’s electricity market redesign misses the mark

European Commission building in Brussels (photo Sam Barnett)

To address the crisis in the EU power sector, the European Commission has embarked on a fundamental reform process – the Market Design Initiative. However, according to Michael Hogan, Senior Advisor at the Regulatory Assistance Project (RAP), the problem with the EU power sector today is not so much market design as a glut of old, inflexible baseload generation. … [Read more...]