Long term simulation of capacity market considering uncertainty demand and agents´ strategic behavior in a hydro-based system

Aiming the supply adequacy of modern electricity market, market designers point out the need for a mechanism to coordinate and promote the expansion. The recent review of the capacity markets have shown the potential of this approach to reach this goal for thermoelectric systems. This paper is a contribution to the supply adequacy discussion and presents a qualitative and quantitative comparative analysis of energy-only markets and capacity market applied to hydro-based systems. We demonstrate that the capacity market is also feasible for hydro-based systems, overcoming its typical high spot price volatility.