Steady State price of Iran Capacity Certificate Market

Document Type : Original Article

Authors

1 Investment Expert of Office of investment & the water and electricity market regulation, Ministry of Energy, Tehran, Iran

2 Professor, faculty of Electrical Engineering, Shahid Beheashti University, Tehran, Iran

Abstract

In Iran's electricity market, the energy market (with a price ceiling and ancillary services) and the capacity market are active separately. Meanwhile, the energy market price will cover the annual costs of the Peak-Load Power Plant, including the anniversary of the overhaul cost. The capacity market includes two sub-markets, the Energy Conversion Agreement (ECA) contract and the capacity certificate market, the total price of which should cover the initial investment cost of peak-load power plants. Naturally, over time, as the share of the capacity certificate price increases through competitive bidding, the share of the price of the guaranteed electricity purchase contract will decrease. The question is, if the share of the price of the guaranteed electricity purchase contract reaches zero, or if ECA is deleted, what would the price of the capacity certificate converge to? That is the subject of this paper.
The results indicate that before considering the consumption simultaneity coefficient (=0.4) of consumers' electricity, the long-term Capacity Certificate Price (CCP) should converge to peak-load power plant fixed costs and market excess demand, which evaluates to 1000 USD per kw in 2021.

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Journal of Energy and Economic Development
Volume 1, Issue 2
September 2022
Pages 86-92

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