Design of efficient generation markets

The design of spot markets for generation services, such as energy, regulation, and operating reserves, and longer term markets for capacity, remain in evolution in many countries. Market design includes definition of the service, bid, or offer requirements, and rules for pricing and financial settlement. In the United States, most organized regional markets have converged on similar elements of spot market design. The design of capacity markets remains influx. Market power mitigation is currently a regulatory requirement in the United States, and experience with different methods shows that it must be carefully aligned with market design to ensure both efficient pricing and efficient investment. This paper surveys these topics and their relationships to each other and identifies researchable issues.