Jiaxing Wu, a Ph.D. Student in the Energy, Environmental, and Food Economics Program at Penn State, will present the EEEP Seminar Series, “Comparing Designs for Resource Adequacy in Laboratory Electricity Markets” on March 20, 2024.
Abstract:
Ensuring resource adequacy is crucial for electric power system reliability. However, the imperfections of a pure energy-only market can lead to suppressed prices and inadequate revenue, hindering investments in new generation capacity. Creating effective investment incentives has been a focus in the restructuring of the electricity sector, with regulators implementing various market designs across regions. We conduct laboratory experiments to compare different market designs in incentivizing capacity investment and the level of cost of unserved energy they incur. Subjects act as firms, making capacity decisions and competing to meet energy demand across periods in different market structures. We examine three designs: (1) a baseline energy-only market, (2) an energy market with an operating reserve demand curve for additional revenue generation through reserve provision, and (3) a capacity market preceding the energy market, directly compensating firms for the capacity they make available to the market. Our results suggest that incorporating additional mechanisms can enhance capacity provision and decrease the cost of unserved energy in comparison to an energy-market design.
Speaker Bio:
Jiaxing earned a B.A. in Economics from Wesleyan College and a M.S. in Economics from the University of Illinois at Urbana Champaign. She is currently a Ph.D. student in the Energy, Environmental, and Food Economics program at PSU. Her research focuses on lab experiments to compare electricity market structures and modeling of interdependent gas-electric systems.