A systematic review of electricity market liberalisation and its alignment with industrial consumer participation: A comparison between the Nordics and China

Nicolas Fatras, Zheng Ma, Hongbo Duan and Bo Nørregaard Jørgensen

Renewable and Sustainable Energy Reviews, 2022, vol. 167, issue C

Abstract: The alignment between electricity market liberalisation and consumer participation is essential to improve market efficiency, increase system flexibility and support the transition to a low-carbon electricity system. However, consumer-side market participants, especially large energy consumers, remain passive actors in electricity markets and have little or no market participation strategy. Therefore, this paper aims to examine the alignment status between market liberalisation properties and industrial consumer participation criteria, and investigate the influence of market design and market intervention on consumer-side market participation. A multi-criteria market participation suitability evaluation is proposed for the examination and investigation of two electricity markets, the Nordic region and China. The results show that the more liberalised Nordic electricity market provides good participation incentives for cost savings but fails to address other criteria such as financial security or ease of adoption; the more regulated and less competitive submarkets in the Chinese market provide less opportunities for strategic cost savings but are easier to adopt and give consumers better long-term financial overviews. In general, market context strongly influences the preferred market type for consumer participation. Nonetheless, market intervention is essential to ensure consumer-side market participation, irrespective of the stage of liberalisation. The required amount of market intervention depends amongst others on the type of submarket, and the service it provides to the grid. The developed evaluation method is applicable to different electricity markets and industrial consumer types, and can be used by policymakers for market liberalisation design and by industrial consumers for market participation strategy planning.

Keywords: Electricity market liberalisation; Large-scale electricity consumer; Demand-side management; Market participation evaluation; Electricity market ecosystem (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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DOI: 10.1016/j.rser.2022.112793

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