Long-Term Resource Adequacy, Long-Term Flexibility Requirements, and Revenue Sufficiency

Michael Milligan, Aaron Townsend, Erik Ela, Audun Botterud, Todd Levin, Aaron Bloom

Research output: Chapter in Book/Report/Conference proceedingChapter


Variable generation (VG) can reduce market prices over time and also the energy that other suppliers can sell in the market. The suppliers that are needed to provide capacity and flexibility to meet the long-term reliability requirements may, therefore, earn less revenue. This chapter discusses the topics of resource adequacy and revenue sufficiency - that is, determining and acquiring the quantity of capacity that will be needed at some future date and ensuring that those suppliers that offer the capacity receive sufficient revenue to recover their costs. The focus is on the investment time horizon and the installation of sufficient generation capability. First, the chapter discusses resource adequacy, including newer methods of determining adequacy metrics. The chapter then focuses on revenue sufficiency and how suppliers have sufficient opportunity to recover their total costs. The chapter closes with a description of the mechanisms traditionally adopted by electricity markets to mitigate the issues of resource adequacy and revenue sufficiency and discusses the most recent market design changes to address these issues.
Original languageAmerican English
Title of host publicationElectricity Markets with Increasing Levels of Renewable Generation: Structure, Operation, Agent-Based Simulation, and Emerging Designs
Subtitle of host publicationStudies in Systems, Decision and Control, Volume 144
EditorsF. Lopes, H. Coelho
StatePublished - 2018

NREL Publication Number

  • NREL/CH-5D00-71088


  • capacity
  • resource adequacy
  • revenue sufficiency
  • variable generation


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