Capacity Mechanisms in Northwest Europe
- CIEP, November 2012
Capacity Mechanisms in Northwest Europe: between a rock and a hard place?
This report examines the outlook of the current "energy-only" market to provide a sufficient power generation capacity, particularly in markets with increasing shares of variable wind and solar power in the power generation mix, and possible further measures to enhance these prospects. Options for new market mechanisms (i.e., capacity mechanisms) to boost necessary investments in new power generation capacity are discussed, as well as the advantages and disadvantages of these mechanisms. Finally, the paper offers an overview of the implications for different countries in Northwest Europe to implement different market mechanisms or to decide not to alter their current market mechanism, in contrast to their neighbours.