Institute for Public Economics Workshop Dr. David Brown held March 27, 2017

IPE Workshop with Dr. David Brown -The Economics of Capacity Payment Mechanisms in Restructured Electricity Markets

Staff Writer - 23 March 2017

The Economics of Capacity Payment Mechanisms in Restructured Electricity Markets - Dr. David Brown Presentation Slides

On March 27, 2017 the Institute for Public Economists hosted as part of their Workshop series, Dr. David Brown from the Department of Economics, University of Alberta.

In the last twenty years, electricity markets have undergone substantial changes with a movement towards market-based mechanisms. Since markets were restructured, there have been concerns over the execution of market power and the ability of these market-based mechanisms to attract investment that ensures there is a stable supply of electricity. In numerous jurisdictions worldwide, these concerns led regulators to adopt capacity payment mechanisms that aim to create incentives for firms to invest in generation capacity. In November 2016, the Alberta government announced a change in Alberta's electricity market design from an "Energy-Only" market design to one that includes a capacity market. This workshop discussed the underlying economics of capacity markets and the specific implications for Alberta, with a focus on the costs and benefits of capacity markets relative to other possible market designs.

Dr. David Brown is an Assistant Professor of Economics at the Department of Economics, University of Alberta. Professor Brown received his Ph.D. in Economics from the University of Florida, where he was the recipient of the Walter Lanzillotti Dissertation Award. He was also the recipient of the Best Dissertation in Public Utilities Award, granted by the Transportation and Public Utilities Group of the American Economic Association. Dr. Brown's fields of research include Energy Economics, Applied Econometrics, Industrial Organization, and Regulatory Policy. His current work focuses on the impact of energy policies on the performance of restructured electricity markets. In particular, he investigates the design of electricity retail tariffs in the presence of a growing penetration of demand-side management resources such as residential solar panels and demand response mechanisms. His previous work analyzes the performance of restructured electricity markets by measuring the degree of market power execution and inefficiencies in wholesale electricity procurement auctions. Dr. Brown's research provides important lessons for the design of electricity markets. Professor Brown has also also written on topics associated with child healthcare policy.