Global Evolution of Power Market Designs

Elcin Akcura and Emelly Mutambatsere

No 10986, Policy Research Working Paper Series from The World Bank

Abstract: The design of the power market determines how the sector can address complex economic, social, environmental, and engineering challenges to deliver sustainable and reliable electricity at least cost to consumers. This is no simple task, as supply and demand must be balanced every second, multiple resource and network constraints must be satisfied, and the market must send the correct price signals to motivate efficient generation and investment in the sector over time. There is significant heterogeneity in the electricity market designs adopted by countries globally. No “one-type-fits-all” blueprint exists, and for any design to function well, the country, political, and economic context matters. At this juncture, the experimentation continues. This paper takes stock of the global patterns and trends in the adoption of different power market design options, utilizing a unique new Global Power Market Structures Database (Akcura 2024) covering 230 economies for the period 1989 to 2024. The paths these countries have taken in structuring their power markets provide valuable lessons on the multiple models that can support the development of the power sector in different country contexts. The paper draws on global experience to shed light on promising design options for the future.

Date: 2024-11-25
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