Market design for a decarbonised electricity market: the “two market” approach

The profound transformation of the European electricity system is putting into question the design of the electricity markets that emerged during the restructuring of the 1990s and early 2000s. The need for decarbonization and the wave of innovation in ICT are affecting the optimal functioning of those markets. New options, such as the ‘privatization’ of service reliability, are becoming a reality, while some of the solutions adopted in the past, such as reliance on day-ahead energy-only wholesale markets based on marginal pricing, are no longer sustainable. These changes call for a rethinking of the way markets are built within the European Union. This is a fundamental step which academics, practitioners, and policymakers have to make together if they want to provide the conditions for long-term investments, integrate a growing amount of renewable energy sources efficiently and securely, and ensure the active participation of customers and communities at the local level.

Keay, M. and Robinson, D. (2017). ‘Market design for a decarbonised electricity market: the “two market” approach’, in Rossetto, N. (ed.), Design the Electricity Market(s) of the Future, proceedings from the Eurelectric-Florence School of Regulation Conference, 7 June 2017.

By: Malcolm Keay , David Robinson


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