Elementary Analysis of Energy Options for Resource Adequacy

We examine a few elementary cases of forward contracting and a process by which capacity contracts with energy strike prices can lead to incentives for enhanced competition. To motivate and to better enhance the reader's understanding of the experiments in the body of this report, we provide an elementary analysis of markets for electricity capacity and energy. It is structured as a sequence of problems and potential solutions for a cast of characters: a regulator, a single buyer, and either a monopoly supply or a duopoly of identical suppliers in a market. This paper lays out sufficient conditions for a competitive equilibrium in the face of inelastic demand using use of two types of contracts, with a monopoly supplier and a symmetric duopoly