The Market Design Initiative: Enabling Demand-Side Markets

This paper offers a set of recommendations for enabling demand response in order to fully participate in Europe’s wholesale markets. In the short term, it recommends electricity prices should begin to reflect time-varying value of energy, and wholesale markets should establish a right for demand response to participate. In the long term, policymakers should mandate time-varying pricing for all customers; adopt codes and standards encouraging smart appliances, EVs, and in-home automation; reform utility business models to encourage demand response; and improve local value signals via integrated distribution system planning.