Galetovic A., Munoz C. M., Wolak F. A. (2015).

Capacity Payments in a Cost-Based Wholesale Electricity Market: The Case of Chile. The Electricity Journal, Volume 28 (10), pp. 80- 96.




A comparison of the generator revenue and market efficiency implications of an energy and capacity payment market relative to an energy-only market for the cost-based Chilean electricity supply industry finds that, while monthly revenue volatility for generation units is significantly higher for the energy-only market, this is almost entirely explained by an increase in short-term energy price volatility. This increased short-term price volatility provides incentives for market participant behavior that enhances market efficiency and system reliability.