Graham Shuttleworth and George Anstey, examine the interactions between an existing market intervention – Short Term Operating Reserve – and planned measures including the Capacity Market and new cash-out arrangements
Ofgem’s latest (June 2013) Electricity Capacity Assessment gives everyone reason to start worrying about supply adequacy once again. It also provides an opportunity to consider the proper role for centralised interventions, like National Grid’s Short Term Operating Reserve (STOR), to ensure they do not undermine market incentives.
The proposed capacity market and reforms to cash- out pricing seem to reduce the need for STOR. No doubt Ofgem will reflect such developments in defining STOR’s future role…