New article by Benjamin Fram
The article "The reliability pricing model and coal-fired generators in PJM" has been published in Energy Economics.
Energy Economics is on level 3 in the ABS Academic Journal Guide.
Fleten, Stein-Erik, Benjamin P. Fram, and Carl J. Ullrich: The reliability pricing model and coal-fired generators in PJM, Energy Economics, 2024, 134, 107543, Online 20.04.2024.
Abstract
We study the interplay between coal-fired electric power generator retirements, capacity markets, and environmental policies. We focus on the Reliability Pricing Model (RPM) electricity capacity market in PJM Interconnection L.L.C. (PJM). We find that RPM acts as a channel through which environmental regulations affect the supply mix.
Surprisingly, increases in RPM prices lead to more coal retirements even when we control directly for increases in generator profitability induced by higher capacity payments. Increases in RPM prices signal the need for expensive capital improvements and increase the probability of coal retirement.