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Market design for a high-renewables European electricity system

David M Newbery (), Michael Pollitt (), Robert Ritz and Wadim Strielkowski

Renewable and Sustainable Energy Reviews, 2018, vol. 91, issue C, 695-707

Abstract: This paper presents a set of policy recommendations for the market design of a future European electricity system characterized by a dominant share of renewable energy supply (RES), in line with the stated targets of European governments. We discuss the market failures that need to be addressed to accommodate RES in liberalized electricity markets, review the evolution of the EU's RES policy mechanisms, and summarize the key market impacts of variable RES to date. We then set out economic principles for wholesale market design and use these to develop our policy recommendations. Our analysis covers the value of interconnection and market integration, electricity storage, the design of RES support mechanisms, distributed generation and network tariffs, the pricing of electricity and flexibility as well as long-term contracting and risk management.

Keywords: Electricity markets; Wholesale market design; Renewable energy; Interconnection; Electricity storage; Long-term contracts; Capacity markets (search for similar items in EconPapers)
JEL-codes: H23 L94 Q28 Q48 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Market design for a high-renewables European electricity system (2017) Downloads
Working Paper: Market design for a high-renewables European electricity system (2017) Downloads
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