The political economy of electricity system resource adequacy and renewable energy integration: A comparative study of Britain, Italy and California

Abstract

The need to integrate growing shares of variable renewable resources, like solar and wind, into the power system has initiated a new wave of resource adequacy policy reforms. Securing adequate resources on the system, particularly flexible and peak capacity, is indeed crucial for ensuring long-term grid reliability amid increased supply variability. While extensively explored from a techno-economic perspective, the political economy drivers and implications of these changes are frequently overlooked. Yet, power system evolution is not merely shaped by logics of techno-economic optimisation, it is also inherently political, rooted in specific liberalisation histories, political and institutional settings.This paper contributes to the literature by conducting a comparative political economy analysis of recent resource adequacy reforms in Britain, Italy, and California. It explores how differences in the technical and political economy contexts of these jurisdictions affected their strategies for securing resource adequacy capacity and investment between 2013 and 2021. Conclusions draw on the analysis of over 134 policy documents and 53 in-depth interviews with power system stakeholders.All jurisdictions introduced significant changes in resource adequacy policy, including explicit out-of-market mechanisms to remunerate resource adequacy capacity. The energy transition is thus reconfiguring state-market relations in the power sector, even in traditionally liberal countries. However, variation exists in the scope of reform, mechanism designs, policy trade-offs, and technological outcomes. This stems from context-specific political priorities, state-market relations, national and multi-level governance arrangements, market structures and stakeholder interests. This has important implications for power sector governance, as discussed in this paper.