Re-Designing GB’s Electricity Market Design: A Conceptual Framework Which Recognises the Value of Distributed Energy Resources

Thomas Pownall, Iain Soutar and Catherine Mitchell
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Thomas Pownall: Energy Policy Group, University of Exeter, Penryn TR10 9FE, UK
Iain Soutar: Energy Policy Group, University of Exeter, Penryn TR10 9FE, UK
Catherine Mitchell: Energy Policy Group, University of Exeter, Penryn TR10 9FE, UK

Energies, 2021, vol. 14, issue 4, 1-26

Abstract: The design of electricity markets determines the technologies, services and modes of operation that can access value, consequently shaping current and future electricity landscapes. This paper highlights that the efficacy of Great Britain’s electricity market design in facilitating net zero is inadequate and must be reconfigured. The rules of the current electricity market design are remnants of an electricity sector dominated by large-scale, centralised, fossil fuel technologies. Therefore, routes to market for the provision of necessary services to support net zero, not least flexibility, are largely inaccessible for distributed energy resources and, despite their benefits to the system, are thus undervalued. Based upon a review and consolidation of 30 proposed electricity market designs from liberalised electricity sectors, this paper proposes a new electricity market design for Great Britain. This design is presented alongside a new institutional framework to aid in the efficient operation of the market. Specifically, this paper proposes a new local balancing and coordinating market located at each grid supply point (the transmission and distribution interface). This is realised through the implementation of a distributed locational marginal pricing structure which is governed by the evolution of the current distributed network operator, known as the distributed service provider (DSP). The DSP also operates a local balancing and ancillary market for their geographical area. The wholesale market is reconfigured to coordinate with these new local markets and to harmonise the actors across the distribution and transmission network.

Keywords: distribution gap; smart energy system; COVID-19; distributed locational marginal price; decentralised electricity system (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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