Exploring the Role of Reserve Capacity in Capacity Investment Incentives

Amid "carbon peaking and carbon neutrality", new energy’s intermittency causes "low prices, high costs" in power systems. Traditional markets fail to internalize system costs and address reserve capacity market failures. This paper redefines reserve capacity’s dual value, proposing a "reserve capacity obligation" mechanism via auctions to link investment and reliability. It aids cost recovery for thermal power and energy storage, optimizing a multi-market system for decarbonization.