Abstract:
Liberalization of electricity industry has as its basic objective an increasing of efficiency. The investment decision in new generation capacity is especially relevant because the electricity supply is indispensable due to its utilization in the majority of the productive processes. In this context, the objective of this paper is to provide a comprehension of the specific dynamics of the generation investment in the new liberalized electricity markets. So, we develop a simulation model of the Spanish electricity market to determine if the electricity prices, shaped in the wholesaler market and the power guarantee, actual investment incentive, provide a suitable sign with regard to the moment and amount of new investments to be made.