Electricity Market Design
The disruption that renewables are causing in the electricity sector is certainly good news for the environment. In fact it is necessary news in order to tackle climate change.
However, this disruption could signal the end of traditional electricity market design as we know it. Traditional electricity market design did not anticipate the renewables revolution, or government intervention in the name of clean energy on the scale that has been seen. For example, renewables auctions conducted outside of the traditional market arrangements are now the primary route to market for new generation investment in a number of jurisdictions.
Electricity markets have been developed since the 1990s and now are taken for granted in many jurisdictions. But before long, without significant reform, they might simply cease to perform what was possibly the main reason for their creation: to efficiently attract and support new generation investment.
The issue varies widely by geography. Some countries are further down the renewable path than others.
In short, a new transition is underway and at stake are some of the essential functions currently performed by electricity markets. There is particular uncertainty regarding the most fundamental task of all markets: ensuring an efficient allocation of resources.
Easter Bay is at the forefront of the new round reforms: to ensure electricity market design is fit for purpose for the new clean energy future.