Managing common pool resources in electricity grids – the implications for planning and market design

The modern grid relies upon a range of critical system-wide and local services to manage power system security.  Particular local services, such as system strength and voltage control, are increasingly in shortage as the grid shifts towards more variable and inverter-based sources.  From an economic perspective, these services could be viewed as common-pool resources and require a nuanced approach to procurement.  In this paper we draw upon the rich literature in common pool resource (CPR) theory to understand which services lend themselves to CPR regimes, how such services can be procured and funded and the role of differential ‘local platform’ co-ordination in managing a particular subset of ‘complex’ CPRs.

By: Farhad Billimoria , Rahmat Poudineh