Abstract: The resource adequacy problem and the theoretical underpinning of capacity markets will be reviewed using a simplified power system investment model. Numerical examples using this model demonstrate how incorrect accreditation in capacity markets since their introduction has likely led to over-investment in gas-fired power plants. I will then critically examine a key assumption made in the design of capacity markets using a more detailed simulation of power system operations. Numerical examples using this model demonstrate that capacity markets could introduce significant inefficiency due to this incorrect assumption. Lastly, I will introduce a model describing the incentives faced by storage resources operating in liberalized markets. Numerical examples using this model demonstrate that capacity markets are fundamentally ill-suited to systems with significant amounts of storage, suggesting that alternative approaches to ensuring resource adequacy in liberalized systems are more promising.
Biography: Jacob Mays is an assistant professor in the School of Civil and Environmental Engineering at Cornell University. His research focuses on applications of stochastic optimization and statistical learning in energy systems. Mays holds an A.B. in chemistry and physics from Harvard University, an M.Eng. in energy systems from the University of Wisconsin–Madison, and a Ph.D. in industrial engineering and management sciences from Northwestern University.