Several interconnected power systems worldwide have largely thermal and hydro production along with CO₂ cap-and-trade (C&T) systems and variable renewable energy sources (VRES). C&T policies increase VRES generation, and socially optimal storage deployment could integrate VRES output. However, hydro reservoirs may be used strategically due to market power. We investigate these distortions and assess measures for their mitigation via a bottom-up equilibrium model of New York and Québec. In particular, we find evidence that hydro producers shift water between seasons to manipulate electricity prices even under a net-hydro production constraint. Alternative regulation covering net imports as well as net-hydro production limits such temporal arbitrage but enables firms with both thermal generation and pumped-hydro storage to exercise spatial arbitrage. We demonstrate that these distortions will be exacerbated under more stringent C&T policies because price-taking thermal producers are less able to respond to price signals.

全球范围内一些互连的电力系统主要生产热能和水力发电，以及CO ₂限额交易（C＆T）系统和可变可再生能源（VRES）。C＆T策略增加了VRES的生成，并且社会上最佳的存储部署可以集成VRES的输出。但是，由于市场力量的原因，可以在战略上使用水库。我们调查了这些扭曲，并通过纽约和魁北克的自下而上的均衡模型评估了缓解措施。特别是，我们发现有证据表明，即使在净水力发电的限制下，水力发电商也会在不同季节之间调水以控制电价。涵盖净进口和净水电生产的替代法规限制了此类临时套利但是，既有热力发电又有抽水蓄能的公司都可以进行空间套利。我们证明，在采取更严格的C＆T政策的情况下，这些扭曲现象将会加剧，因为采取价格的热力生产商对价格信号的响应能力较弱。