Abstract for: Assessing security of supply in a large-based hydroelectricity system
One of the primary challenges of the power industry is achieving the appropriate capacity investment that guarantees security of supply. This is turning an even more relevant issue as power generation is increasingly based on renewables, including traditional hydroelectricity, and as these sources are intermittent and seasonally dependent. In this context, policy makers and regulators implement capacity mechanisms seeking to outshine the intrinsic shortcomings of renewables. These turn problematic as, given the uncertainty involved, large overcapacity will become habitual and idle, representing costs to the system. The results of these are not that obvious, given the characteristics of liberalized markets, and the regulations and long-term commitments associated with this type of mechanism. This paper uses system dynamics modelling to evaluate the capacity mechanism that has been implemented in the Colombian electricity market, and explore its drawbacks. Under severe draughts scenarios, the capacity mechanism, though has induced a large system reserve margin, exposes the system to blackouts and very high electricity prices as these maybe concurrent with delays in capacity projects and unavailability of backup plants, as occurred in the past. To conclude capacity mechanism needs to be rethought (less vulnerable), diversified generation portfolio is desirable and with existing conditions system is fragile and high prices will be usual.