David Lara Arango

Capacity Mechanisms in Electricity Markets: an Experimental Study Using System Dynamics Modeling David Lara Arango

At the first years of electricity markets deregulation, the academic discussion was first oriented to discuss the short-term market efficiency and competitiveness. Now, after more than twenty years, the issue of the long-term security of supply has become increasingly relevant. A number of authors have used simulations and laboratory experiments to study capacity mechanisms in order to address this issue. This work explores the rationality of individuals? decisions in a set of pilot experimental system dynamics based models to test capacity mechanisms in electricity markets. Specifically, this work compares one market-oriented mechanism with an interventionist mechanism to see which one of them represents an improvement in terms of market profitability and stability.