Power market design choices with high shares of intermittent renewables

Abstract

The European Commission's long-term strategy envisages a carbon neutrality of the economy by 2050. There is a general consensus that in this context, a high share of renewable power generation will be photovoltaic- and wind-based. This has two implications for the power market functioning: (i) the energy system becomes necessarily more decentralised while current markets, based on a zonal representation of the transmission network, are not able to capture this dimension. This study provides an overview on key choices to be made when designing local markets. (ii) Also the study raises the question whether markets dominated by intermittent renewable energy source can be organised in a decentral way (current reference in European power markets) or whether some level of centralisation (as typically in most of US markets) is required to coordinate market and network operation.