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Melting-pots and salad bowls: the current debate on electricity market design for RES integration

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  • Arthur HENRIOT
  • Jean-Michel GLACHANT

Abstract

This paper discusses a series of Numbers regarding the economic integration of intermittent renewables into European electricity markets. This debate has gained in importance following the large-scale deployment of wind farms and photovoltaic panels. As intermittent renewables constitute a significant share of the installed generation capacity, they cannot be kept isolated from the electricity markets. We argue that RES integration is first and foremost an Number of economic efficiency, and we review the main debates and frameworks that have emerged in the literature. We first consider to what extent intermittent resources should be treated the same way as dispatchable resources. We then analyse the different tools that have been proposed to ensure the required flexibility will be delivered: finer temporal granularity and new price boundaries, integration of a complex set of balancing markets, and introduction of tailor-made capacity remuneration mechanisms. Finally we introduce the topic of space redistribution, confronting cross-continental markets integration to the emergence of a mosaic of local markets.

Suggested Citation

  • Arthur HENRIOT & Jean-Michel GLACHANT, 2013. "Melting-pots and salad bowls: the current debate on electricity market design for RES integration," RSCAS Working Papers 2013/55, European University Institute.
  • Handle: RePEc:rsc:rsceui:2013/55
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:rensus:v:81:y:2018:i:p2:p:2181-2195 is not listed on IDEAS
    2. repec:eee:renene:v:113:y:2017:i:c:p:1111-1121 is not listed on IDEAS
    3. Simona Bigerna and Carlo Andrea Bollino, 2016. "Optimal Price Design in the Wholesale Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    4. repec:eee:enepol:v:116:y:2018:i:c:p:312-322 is not listed on IDEAS
    5. repec:eee:energy:v:150:y:2018:i:c:p:722-734 is not listed on IDEAS
    6. Mathias Mier, 2018. "Policy Implications of a World with Renewables, Limited Dispatchability, and Fixed Load," Working Papers V-412-18, University of Oldenburg, Department of Economics, revised Jul 2018.
    7. Henriot, Arthur, 2015. "Economic curtailment of intermittent renewable energy sources," Energy Economics, Elsevier, vol. 49(C), pages 370-379.
    8. Glachant, Jean-Michel, 2016. "Tacking stock of the EU “Power Target Model”… and steering its future course," Energy Policy, Elsevier, vol. 96(C), pages 673-679.
    9. Klaus Eisenack & Mathias Mier, 2018. "Peak-load Pricing with Different Types of Dispatchability," Working Papers V-411-18, University of Oldenburg, Department of Economics, revised Jul 2018.
    10. de Menezes, Lilian M. & Houllier, Melanie A., 2015. "Germany's nuclear power plant closures and the integration of electricity markets in Europe," Energy Policy, Elsevier, vol. 85(C), pages 357-368.
    11. repec:eee:juipol:v:45:y:2017:i:c:p:118-127 is not listed on IDEAS
    12. Rious, Vincent & Perez, Yannick & Roques, Fabien, 2015. "Which electricity market design to encourage the development of demand response?," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 128-138.
    13. Lund, Peter D. & Lindgren, Juuso & Mikkola, Jani & Salpakari, Jyri, 2015. "Review of energy system flexibility measures to enable high levels of variable renewable electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 785-807.
    14. repec:eee:renene:v:111:y:2017:i:c:p:256-264 is not listed on IDEAS
    15. repec:eee:appene:v:195:y:2017:i:c:p:36-51 is not listed on IDEAS

    More about this item

    Keywords

    Electricity market design; large-scale renewables; intermittency;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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