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SUMMARY:The Effect of Capacity Payments on Peaking Generator Availability 
 in PJM - Stein-Erik Fleten (Norwegian University of Science and Technology
 )
DTSTART:20190320T111500Z
DTEND:20190320T120000Z
UID:TALK121321@talks.cam.ac.uk
CONTACT:INI IT
DESCRIPTION:We<br>  study the effects of capacity payments on the strategi
 c decisions of plant<br>  managers for peaking units in the PJM Interconne
 ction. We achieve this<br>  through a structural estimation of maintenance
  and switching costs between<br>  the operational state\, the standby stat
 e and retirement of generating units\,<br>  using annual data from 2001-20
 16. The empirical data shows less switching<br>  between states after the 
 introduction of capacity remunerations in 2007. We<br>  find that the role
  of peaking units has changed\, with the units being<br>  dispatched more 
 often. In the counterfactual analysis\, we find a clear<br>  connection be
 tween the level of capacity payments and switching. We conclude<br>  that 
 the current level of capacity payments in PJM incentivizes peaking units<b
 r>  to stay in the operational state.Stein-Erik Fleten (with Benjamin Fram
 \, Magne Ledsaak\, Sigurd Mehl\, Ola R&oslash\;ssum\, Carl Ullrich)
LOCATION:Seminar Room 1\, Newton Institute
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