Groupe d’études et de recherche en analyse des décisions

Electricity Capacity Investment: Modeling ideas and Policy Challenges

Pierre-Olivier Pineau University of Victoria, Canada

Reforms in the electricity sector modify competition levels and ownership structures. New investment models in electricity capacity should therefore take strategic behavior and various risk attitudes into account in order to reflect the reformed sector. This has however not been the case, and the operational research / energy economics literature proposes very little to face the new policy challenges posed by competitive electricity markets with risk averse investors.