Meeting criteria for capacity markets

Abstract

The European electricity market has been constructed as “energy only market” without the compensation for the costs of generation adequacy. Such as a market is able to operate in the presence of the capacity excess. However, gradually the power reserve margins have been diminishing causing the fears of the power balancing in the coming years. One of the measures to stimulate the investment in power generating capacity is the introduction of capacity or power markets. Several countries such as Spain, Italy and Sweden introduced such markets in various forms several years ago. The uncoordinated rush for new market forms has raised the fears in the European Commission that new markets may have the negative impact on the competition as well as on the energy policy of the European Union. The paper presents the application of fuzzy sets for the analysis of the requirements for capacity markets and it demonstrates that such a methodology is not only a new approach but also it is the best way for such analyses.