OIES Podcast – Reforming Capacity Markets

In this latest OIES podcast, from the Electricity Programme, Michal Meidan talks to Dimitra Apostolopoulou about her forthcoming OIES paper “Reforming Capacity Markets: How to Incorporate the Flexibility of Residential Consumers?”. In the energy transition resource adequacy has become more challenging due to insufficient market revenues driven by lower electricity prices and the missing money problem. In this regard, capacity markets are introduced to compensate resources for capacity thus providing an additional stream of revenues. In this podcast we discuss limitations of current capacity markets designs and how they need to adapt to a low carbon system. We stress the important role of demand response in resource adequacy where consumers can express their “value for capacity”. We then discuss the barriers faced especially by residential demand response to participate in capacity markets and propose a business model of how these can be overcome