Generation failures, strategic withholding, and capacity payments in the Turkish electricity market

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dc.contributor.authorDurmaz, Tunç
dc.contributor.authorAcar, Sevil
dc.contributor.authorKızılkaya, Simay
dc.date.accessioned2023-12-03T12:42:08Z
dc.date.available2023-12-03T12:42:08Z
dc.date.issued2024en_US
dc.departmentFakülteler, İşletme Fakültesi, Uluslararası Ticaret Bölümüen_US
dc.description.abstractSince the deregulation of significant parts of electricity markets in many countries worldwide, a generally pronounced matter is that firms strategically lower their generating capacity to raise electricity prices. This paper investigates whether strategic capacity withholding exists in the form of generation failures in the Turkish day-ahead market and whether the capacity remuneration mechanism contributes to the failure durations. The empirical results show strong support for strategic capacity withholding in the Turkish market, and the capacity mechanism adds to the duration of these failures. To the best of our knowledge, this is the first study to investigate capacity withholding considering centrally determined capacity prices and to focus on failure durations and the potential amount of power generation losses they cause. Our analysis conveys core messages for policymakers. A random verification mechanism may be implemented to verify that the failures are purely technical and apply penalties for nonperformance. Second, the Turkish capacity mechanism needs to be restructured to make it more compatible with performance incentives. Our analysis, while focused on the Turkish market, provides insights into the prevalent challenges and potential solutions tied to strategic capacity withholding in deregulated electricity markets globally, notably those employing capacity remuneration mechanisms.en_US
dc.identifier.citationDurmaz, T., Acar, S., Kızılkaya, S. (2024). Generation failures, strategic withholding, and capacity payments in the Turkish electricity market. Energy Policy, 184.en_US
dc.identifier.issn0301-4215
dc.identifier.scopus2-s2.0-85177046009
dc.identifier.scopusqualityQ1
dc.identifier.urihttps://hdl.handle.net/20.500.12939/4247
dc.identifier.volume184en_US
dc.identifier.wosWOS:001116907900001
dc.identifier.wosqualityQ1
dc.indekslendigikaynakWeb of Science
dc.indekslendigikaynakScopus
dc.institutionauthorKızılkaya, Simay
dc.language.isoen
dc.publisherElsevier Ltden_US
dc.relation.ispartofEnergy Policy
dc.relation.isversionof10.1016/j.enpol.2023.113897en_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/closedAccessen_US
dc.subjectCapacity mechanismen_US
dc.subjectCapacity withholdingen_US
dc.subjectMarket poweren_US
dc.subjectMoral hazarden_US
dc.subjectProduction failuresen_US
dc.titleGeneration failures, strategic withholding, and capacity payments in the Turkish electricity market
dc.typeArticle

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