Towards long-term economic welfare in deregulated electricity markets: Testing capacity mechanisms in an experimental setting

A number of mechanisms have been suggested for capacity adequacy. A study using laboratory experiments both of procurement of long-term strategic reserve contracting and of centralized auctioning for capacity contracts suggests that the centralized auctioning process stabilizes laboratory markets and provides economic welfare comparable to a free market. The strategic reserve contracting process does not seem to improve either of the two aspects compared to a non-regulated market.