How may a generator manage the risk of PJM's incentive scheme for capacity delivery?

C. K. Woo, K. H. Cao*, A. Tishler

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Motivated by PJM's recently proposed incentive scheme for capacity delivery during system emergencies, this paper develops two wholesale market products that a generator may use to manage the scheme's risk. The first product is an insurance that removes the scheme's downside risk due to the penalty for under-delivery. The second product is a forward contract that insulates a generator from the scheme's risk due to the penalty for under-delivery and reward for over-delivery. The paper's main contribution is how to price these newly developed products using readily available data.

Original languageEnglish
Article number107105
JournalElectricity Journal
Volume35
Issue number4
DOIs
Publication statusPublished - May 2022

Scopus Subject Areas

  • Business and International Management
  • Energy (miscellaneous)
  • Management of Technology and Innovation

User-Defined Keywords

  • Capacity delivery
  • Capacity market
  • Incentive scheme
  • PJM
  • Risk management

Fingerprint

Dive into the research topics of 'How may a generator manage the risk of PJM's incentive scheme for capacity delivery?'. Together they form a unique fingerprint.

Cite this