Power Market Operations and System Reliability

This report examines market design issues and reforms that can help Europe support additional renewable energy development while minimizing integration costs. The paper suggests that capacity products should be differentiated by “operational characteristics,” allowing prices to reflect the added value of flexibility that supports the integration of variable renewable energy. The report also points out several “no regrets” policies such as expanding balancing areas and opening up markets to demand-side participation that can help increase efficiency and lower costs, echoing many of the recommendations in Aligning Power Markets to Deliver Value.