Analysis Of The Impact Of The Value Compensation On Generation Investment Under The Power Market

The final object of the reform in electricity market is to reduce the cost and to improve the effectiveness. It is very important to guarantee the proper capacity which is good for steady price and long-time work. But in the market circumstance, the power company is independent economic realty which aims for profits. It doesn't account for the system's steady work. The rules maker has to consider carefully what the rules will be and how to guide the right generation investment. Today most people hold that, it is very difficult to get enough generation investment only in the power market. What about the introduction of Capacity Value Compensation? This is discussed in this paper.In this paper, we discuss the impact of different capacity compensating methods on generation investment, including three phases: first, we discuss the generation investment in the monopoly market, and work out the minimum generation investment according to the whole costs of alteration and investment; this is the prime investment in the ideal market. We will take this as the standards of the following discussions in the paper. Second, we set up a static and distribute generation investment model which only includes power market, supervise the state of generation investment without compensation, and compare to the ideal results. At last, we develop a generation investment model with capacity value compensation, and discuss the effect of generation investment which generated by the British capacity value compensation and the two-step pricing method based on the above model.