Re-powering Markets

Re-powering Markets: Market Design and Regulation During the Transition to Low-carbon Power Systems

Foreword

The 2015 ministerial meeting of the International Energy Agency (IEA) member states adopted a new strategic vision to transform the IEA into a global clean energy technology hub, while maintaining its core mission on energy security. Clean energy and energy security are closely intertwined, particularly in the realm of electricity regulation and market design. Decarbonization efforts require robust supply security, and the most promising technological progress has been in wind and solar photovoltaics.

Introduction

The traditional centralized high-carbon power system has generated over a third of global carbon emissions. Transitioning to a low-carbon system requires system operation and regulatory reforms to integrate variable renewable sources effectively. Rapid advancements in low-carbon, demand-response, and storage technologies can enhance system efficiency and security, but achieving their full potential requires new policy and regulatory approaches.

Chapter 1: Re-powering Markets - Context and Key Issues

1. Electricity Reforms: The need for electricity reforms to support innovation and competition.
2. Challenges Facing the Power Sector: Challenges include aligning electricity market design with low-carbon goals, managing market and carbon price uncertainties, and transforming the regulatory landscape.
3. Re-powering Markets: The concept of re-powering markets involves striking a balance between supporting innovation and competition while mobilizing capital for low-carbon source deployment.

Chapter 2: Low-carbon Generation Investments

1. Aligning Electricity Market Design and Low-carbon Electricity: Ensuring that market designs support low-carbon investments.
2. Market and Carbon Price Uncertainty: Uncertainty in market and carbon prices can hinder low-carbon investment, necessitating supportive regulatory frameworks.
3. Regulatory Transition: Regulatory instruments to support low-carbon investments are crucial for a successful transition.

Chapter 3: Short-term Markets

1. New Operational Requirements: Meeting the increasing flexibility needs of large shares of variable and distributed resources.
2. Resolution of Market Design: Addressing market design issues to accommodate high shares of renewables.
3. Designing Short-term Markets Fit for High Shares of Renewables: Proposing a strawman approach to design short-term markets that can handle high shares of renewables.

References

• Chapter 1: References for electricity reforms, challenges, and re-powering markets.
• Chapter 2: References for aligning market design and low-carbon electricity, market and carbon price uncertainty, and regulatory transitions.
• Chapter 3: References for new operational requirements, market design resolution, and designing short-term markets.

This publication, "Re-powering Markets," is the first official IEA publication analyzing the electricity market framework for low-carbon power systems. It provides insights into the policy and regulatory aspects necessary for a successful transition to a low-carbon power system.