Participation in a mutual fund covering losses due to pest infestation: analyzing key predictors of farmers’ interest through machine learning

In the context of intensified Halyomorpha halys infestations in Italy, this paper provides a very first investigation of key factors that drive fruit growers’ intention to participate in a mutual fund (MF) compensating production losses due to this invasive insect. Data were collected in Veneto Region in Italy, where many farmers suffered H. halys attacks, and interest in the development of innovative risk management tools is growing. The study investigates how behavioral (risk attitude, risk perception) and personality factors (self-efficacy, locus of control) explain farmers’ intention to participate in the MF, additionally controlling for a large number of primary control data (e.g. farmers’ perceptions and characteristics, farm characteristics). The study assumes approximate sparsity and applies the least absolute shrinkage and selection operator (LASSO), a machine learning technique which represents an original approach for research on risk management. Our empirical analysis reveals that farmers’ intention to participate in the MF is driven by an interplay between the perceived risk of production loss, the benefits from participation in the fund, and the farm age, rather than by socio-economic characteristics of the farm. Results provide valuable insights for policymakers and local stakeholders to implement a mutual fund close to the farmers’ needs

Capacity remuneration mechanisms and the transition to low-carbon power systems

Market designs in their current form are facing challenges triggered by the increase of injection from renewable energy sources (RES). Insufficient remuneration of conventional generators in an energy-only market may lead to inadequate generation mixes to cover peak demands and balance intermittent RES injection. Various corrective actions to the market designs are discussed, amongst them capacity remuneration mechanisms (CRMs). In this paper, a model is applied to compare the outcome of an energy-only market, strategic reserves and a capacity market. The comparison is done based on total cost paid to the electricity generators, installed capacities and occuring load shedding. The total costs are split up into energy-based payments (€/MWh), subsidies for RES and capacity-based payments (€/MW). The results show that origin of remuneration change with the chosen market design and lead to different generation mixes. Total cost increase with a CRM. However, taking into account load shedding, the increase of cost must be weighted with indirect costs of energy non-served.status: publishe

An ADMM-Based Method for Computing Risk-Averse Equilibrium in Capacity Markets

Uncertainty in electricity markets introduces risk for investors. High fixed cost and increased dependency on infrequent and uncertain price spikes characterize investments. The risk-averse behavior of investors might lead to poor decision-making and undermines generation adequacy. Electricity market models rarely treat the interaction of market design and risk aversion. The representation of capacity mechanisms in modeling approaches focusing on risk aversion is limited. Our contribution addresses two problems. First,we propose a stochastic market equilibrium model. Investors are represented as risk-averse agents. The conditional value-at-risk is used as risk measure. Second, we propose an algorithm based on the alternating direction method of multipliers to compute a risk-averse equilibrium. We benchmark our approach with a state-of-the-art solver relying on a mixed complementarity problem reformulation. We show that for larger case studies our proposed approach is preferable. The algorithm converges in all cases while conventional solvers fail to compute a risk-averse equilibrium. The methodology is transferable to other risk-averse equilibrium models. With reference to capacity markets, we conclude that they are more beneficial in a risk-averse market. Capacity markets result in lower total cost, while avoiding expected energy not served. This statement still holds with increased price caps in energy-only markets

Review of wind generation within adequacy calculations and capacity markets for different power systems

The integration of renewable energy sources, including wind power, in the adequacy assessment of electricity generation capacity becomes increasingly important as renewable energy generation increases in volume and replaces conventional power plants. The contribution of wind power to cover the electricity demand is less certain than conventional power sources; therefore, the capacity value of wind power is smaller than that of conventional plants. This article presents an overview of the adequacy challenge, how wind power is handled in the regulation of capacity adequacy, and how wind power is treated in a selection of jurisdictions. The jurisdictions included in the overview are Sweden, Great Britain, France, Ireland, United States (PJM and ERCOT), Finland, Portugal, Spain, Norway, Denmark, Belgium, Germany, Italy and the Netherlands.keywords: Adequacy, Capacity credit, Capacity markets, Market integration, Power system, Wind powerstatus: publishe