Could Mexico’s Capacity Market Design Lead to Gaming by Generators?

Fri Mar 01 05:00:00 UTC 2019
Kurt G. Strunk and Willis Geffert

In the March issue of The Electricity Journal, NERA Director Kurt G. Strunk and Senior Consultant Willis Geffert quantify the potential financial rewards from the use of one potential gaming strategy in the Mexican capacity market—the withholding of supply by a power generator for financial gain. Mr. Strunk and Mr. Geffert compare Mexico’s capacity market design to that of other global markets, including NYISO, PJM, ISO-NE, Ireland/Northern Ireland, and Guatemala. Considering the potential incentive to exercise market power in Mexico, the authors introduce possible market design adjustments that would limit the effectiveness of the tactic of reducing available capacity.