Could forward markets stabilize capacity cycles in electricity markets? An experimental study

摘要

© 2023 The AuthorsStabilization of electricity markets has become increasingly important to ensure investments and thereby security of supply. After deregulation, many electricity markets have shown long-term tendencies to cycles, affecting the market's reserve margin, and thus creating significant fluctuation in the price for consumers and return for investors. Forward markets have been discussed as a mechanism to damp these long-term fluctuations and create more stable prices and returns. We use a decision-making experiment in the laboratory to test these theories to understand the effect of the introduction of a forward market compared to having only a spot market. The results show that a forward market reduces the tendency of cycles the market as well as reduces prices.