5S - Future Electricity Markets (5S – Future Electricity Markets)

Abstract:

The central objective of the "5s" project is to span a set of identified potential changes in current electricity markets, which may significantly enhance the benefits from integrating substantial amounts of renewable energy generation into existing power systems, while having a sound methodological background and a straightforward possibility for practical implementation, by respecting operational constraints related to the physical operation of the systems and to the coupling with neighbouring markets. In a few summary points, this will consist in (i) evaluating current electricity market design by identifying barriers for the integration of renewable energy systems; (ii) exploring alternative market designs, e.g. clearing sequence and frequency, zonal vs. LMP (Locational Marginal Prices) markets, approaches to the clearing mechanism itself, market design allowing for the efficient management of uncertainty and flexibility, distributed markets, etc.; and (iii) formulating recommendations for future market designs, based on their impact on resource allocation efficiency and fairness, as well as the resulting incentives for market participants and the system as a whole.