{"id":1300,"date":"2017-08-05T09:35:57","date_gmt":"2017-08-05T07:35:57","guid":{"rendered":"https:\/\/ceem-dauphine.eu\/?p=1300"},"modified":"2024-09-05T09:37:46","modified_gmt":"2024-09-05T07:37:46","slug":"investment-with-incomplete-markets-for-risk-the-need-for-long-term-contracts","status":"publish","type":"post","link":"https:\/\/ceem-dauphine.eu\/en\/investment-with-incomplete-markets-for-risk-the-need-for-long-term-contracts\/","title":{"rendered":"Investment with incomplete markets for risk: The need for long-term contracts"},"content":{"rendered":"<p>Barring subsidies, investment in the power generation sector has come to an almost complete halt in the<br \/>\nrestructured European power sector. Market and regulatory failures such as the well known missing money (see<br \/>\nJoskow, (2006)) but also normal market features such as risk, possibly also affected by market failures like<br \/>\nmarket incompleteness are mentioned as common causes for the situation. This paper discusses incomplete risk<br \/>\ntrading and its impact on investment. The analysis applies computable stochastic equilibrium models on a<br \/>\nsimple market model of the Energy Only type. The paper first compares the cases of complete and fully<br \/>\nincomplete markets (full risk trading and no risk trading). It continues by testing the impact of different risk<br \/>\ntrading contracts on both welfare and investment. We successively consider Contracts for Difference, Reliability<br \/>\nOptions with and without physical back up that we add to our Energy Only market model. We test the impact of<br \/>\nmarket liquidity on the results. Finally, we compare these methods to a Forward Capacity Market that we also<br \/>\nadd to the energy only model. We complete the paper by interpretation of these results in terms of hurdle rate<br \/>\nimplied by these risk-trading situations.<\/p>\n<p>Energy Policy 105 (2017)<\/p>\n","protected":false},"excerpt":{"rendered":"Barring subsidies, investment in the power generation sector has come to an almost complete halt in the [&hellip;]","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13,26],"tags":[],"class_list":["post-1300","post","type-post","status-publish","format-standard","hentry","category-publications-en","category-journal-articles"],"acf":[],"_links":{"self":[{"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/posts\/1300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/comments?post=1300"}],"version-history":[{"count":2,"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/posts\/1300\/revisions"}],"predecessor-version":[{"id":1304,"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/posts\/1300\/revisions\/1304"}],"wp:attachment":[{"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/media?parent=1300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/categories?post=1300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ceem-dauphine.eu\/en\/wp-json\/wp\/v2\/tags?post=1300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}