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September 11, 2013
Article Authored by Brattle Consultants on the Outlook of Capacity Markets Published in Economics of Energy & Environmental Policy

A recent article authored by Brattle principals Sam Newell and Hannes Pfeifenberger and senior associate Kathleen Spees that provides an in-depth look into capacity markets has been published in the latest issue of Economics of Energy & Environmental Policy.

“Capacity Markets – Lessons Learned from the First Decade” provides an introduction into capacity markets, which were introduced in the U.S. in the late 1990s to ensure resource adequacy in liberalized electricity markets where generation must be built by merchant investors rather than regulated entities. In the article, the authors discuss why these markets exist, how they function, how well they have performed over the first decade of their operation, and the current challenges they face.

Based on the authors’ discussion of capacity markets, the article concludes that these markets can work to meet their objectives, but will need to address several design challenges over the next several years.