  Electricity market mechanisms designed to steer sustainable generation of
electricity play an important role for the energy transition intended to
mitigate climate change. One of the major problems is to complement volatile
renewable energy sources by operationally flexible capacity reserves. In this
paper a proposal is given to determine prices on electricity markets taking
into account the operational flexibility of power plants, such that the costs
of long-term capacity reserves can be paid by short-term electricity spot
markets. For this purpose, a measure of operational flexibility is introduced
enabling to compute an inflexibility fee charging each individual power plant
on a wholesale electricity spot market. The total sum of inflexibility fees
accumulated on the spot markets then can be used to finance a capacity market
keeping the necessary reserves to warrant grid reliability. Here each reserve
power plant then gets a reliability payment depending on its operational
flexibility. The proposal is applied to a small exemplary grid, illustrating
its main idea and also revealing the caveat that too high fees paradoxically
could create incentives to employ highly flexible power plants on the spot
market rather than to run them as backup capacity.
