The New Electricity Capacity Market in Britain: Lessons from international experience

“Britain’s Electricity Capacity Auctions: Lessons from Colombia and New England by David Harbord and Marco Pagnozzi, The Electricity Journal, June 2014, Vol. 27, Issue 5.

The article discusses the new British electricity capacity auction in light of recent experience in Colombia and New England, and argues that the proposed descending clock auction design will result in high prices and inefficient allocations due to the exercise of market power. Some alternative auction design options are considered, and a sealed-bid auction is recommended as a better choice.