We assisted an international insurance broker in designing and assessing the value of insurance products against the risk that a generator fails to comply with capacity obligations under the forthcoming Italian capacity remuneration scheme.
We carried out a detailed analysis of the Italian capacity remuneration scheme, and identified the features of the energy market design impacting on the outcome of the capacity scheme.
On that basis, we characterized the content of physical availability obligations falling on the generators contracted by the system operator, also identifying alternative compliance strategies available to different types of generators.
Finally, we assessed the non-compliance risk, and the corresponding cost, for selected generators, through simulations based on historic availability of the generators.
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