Market design for a decarbonized European electricity market

Abstract

The steadiness with which the European Union has pursed its ambitious Roadmap 2050 policy objectives [EC11] is an encouraging sign in the backdrop of a highly uncertain future for global energy policy. Despite the upheaval of environmentally-minded policies in the United States following the Trump election, the damage that the Trump administration can inflict on the global renewable energy and electricity market transformation agenda is expected to be limited as a result of major technological innovations, global market forces and the general momentum of EU policy makers towards de-carbonization and decentralization of the electricity industry [B17]. In this context, we identify the following major challenges for the decarbonized European electricity markets of 2050: (i) the shifting of value from energy markets to services in a near-zero-marginal-cost market; (ii) the lack of harmonization between regional markets and between time frames; (iii) the need to mobilize distributed resources; and (iv) the need to engage demand-side resources through scalable aggregator business models.