Brattle experts conducted a study on the economics of reliability for the Federal Energy Regulatory Commission (FERC) in conjunction with Astrape Consulting. One component of the study was the development and demonstration of an approach for estimating a value-based demand curve for capacity. The study also addressed other aspects of the economics of reliability, including: (a) the sensitivity of reliability-based reserve margins to study assumptions, reliability metric definitions, and system conditions; (b) the “economically optimal” reserve margin compared to reliability-based reserve margins; (c) the impacts of varying demand response (DR) penetration, wind penetration, load forecast error, and intertie levels; and (d) the price, system cost, and customer cost impacts of different energy and capacity market designs.

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