Elementary Analysis of Energy Options for Resource Adequacy

We examine a few elementary cases of forward contracting and a process by which capacity contracts with energy strike prices can lead to incentives for enhanced competition. To motivate and to better enhance the reader´s understanding of the experiments in the body of this report, we provide an elementary analysis of markets for electricity capacity and energy. It is structured as a sequence of problems and potential solutions for a cast of characters: a regulator, a single buyer, and either a monopoly supply or a duopoly of identical suppliers in a market. This paper lays out sufficient conditions for a competitive equilibrium in the face of inelastic demand using use of two types of contracts, with a monopoly supplier and a symmetric duopoly