Evaluating capacity auction design for electricity: An experimental analysis

Despina Yiakoumia* (Corresponding Author), Agathe Rouaix, Euan Phimister* (Corresponding Author)

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This paper considers the design of multi-unit procurement auctions relevant for electricity capacity markets drawing on the structure of the market introduced in Great Britain. Simple games are used to generate predictions about the impact of information feedback between auction rounds and the shape of the demand curve. These predictions are used as benchmarks and tested using a series of
economic experiments. The results show that participants recognize their own and their opponents’ market power opportunities, raising clearing prices and lowering allocative efficiency. No information feedback between rounds reduces average clearing prices and the risk of not achieving the supply target but also typically reduces allocative efficiency. A downward sloping step-demand function leads to competitive prices no matter what the level of feedback is but not necessarily to allocative efficiency. It also significantly increases the risk of not achieving the target level of supply.
Original languageEnglish
Article number106370
Number of pages20
JournalEnergy Economics
Early online date21 Oct 2022
Publication statusPublished - 4 Nov 2022

Bibliographical note

Acknowledgement: Research funds for this work were provided by a PhD scholarship co-funded by the Energy Technology Partnership (ETP), the Scottish Government and the University of Aberdeen. We would like also to thank the late Professor Joseph (Joe) E. Swierzbinski who was an inspiration for this work. He is sorely missed. We would also like to thank the referees for their helpful comments. All usual caveats apply.


  • Capacity auction design
  • Clock auction
  • Experimental economics
  • Market design
  • Market power


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