tag:blogger.com,1999:blog-446210048006827157.post8784246826968317766..comments2023-09-21T08:36:00.461-07:00Comments on Cold Air Currents: For Coal Plants, A Game Of ChickenScott Lufthttp://www.blogger.com/profile/09219859339423144673noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-446210048006827157.post-1209189287731437052011-09-15T20:13:23.603-07:002011-09-15T20:13:23.603-07:00Well, my comment is pretty dopey in hindsight.
Tha...Well, my comment is pretty dopey in hindsight.<br />Thank you for your comment Charlie. <br />Here is what I hope was the basis for that little blurb I wrote after quoting the NY Times article: an electricity system that can meet peak demand seem likely to pay, in some way, for capacity that is infrequently required. Markets that are required to take supply that is not expected to be present at peak demand (specifically wind in Ontario, and many other jurisdictions), are more likely to need to fund capacity through separate mechanisms. The market struck me as a great idea (I had been looking into NordPool's strategic reserve concept before seeing this).<br />The DRC is a poor comparison, but I meant all systems probably have some pieces that would be seen as overvalued if capacity requirement, for peak demand, was not part of the evaluation. The net revenue requirements that are part of more recent CCGT contracts are likely a better example of the capacity costs that crept into Ontario.<br />I wrote some quick hits on economic themes I hope better minds, with better resources, communicate more successfully: http://coldaircurrents.blogspot.com/2011/09/capacity-markets-in-intermittent-supply.htmlScott Lufthttps://www.blogger.com/profile/09219859339423144673noreply@blogger.comtag:blogger.com,1999:blog-446210048006827157.post-42616246590420742852011-09-15T18:21:53.349-07:002011-09-15T18:21:53.349-07:00Well, the DRC was implemented retroactively and is...Well, the DRC was implemented retroactively and is not a market-based solution (ie, it's just added to the bill every month at a sort-of arbitrary rate). It's not clear whether the DRC is going to fund "bad" hydro investments, below-market rates, or whatever else. PJM's market is very transparent, conducted before the fact, and payable per kW, not per kWh. In other words, there's competition in capacity markets, whereas there's no competition for who gets the DRC funding. -Charlie BlanchardCharlie Blanchardhttps://www.blogger.com/profile/12185586904981153595noreply@blogger.com