Brown Bag Seminar: "Detecting strategic capacity withholding through a synthetic supply approach - Cui Prodest?"

This research puts forward a new tool for the detection and assessment of strategic capacity withholding. The aim of this chapter coincides with Bataille et al. (2019), albeit it follows a different approach. The purpose of the methodology proposed in this paper, inspired by the well-established synthetic supply methodology by Ciarreta et al. (2010), is to investigate the hourly equilibria of the wholesale electricity market and assess if any market operator might have taken advantage hypothetically by withholding capacity. For this purpose, a four-step procedure has been adopted: the simulation of counterfactual scenarios, constructed under the assumption of lack of capacity withholding, comparison between the actual and counterfactual equilibria, the hourly analysis of the revenues for each market operator in both scenarios and, finally, the Synthetic Strategic Capacity Withholding Index, which is presented and discussed. This puts forward an original, alternative point of view to detect strategic capacity withholding.