Throughout Europe the structure of the electricity market is currently being hotly debated. Though there are numerous approaches to the issue, a consensus is emerging: a no-regret option designed to make short-term energy markets more flexible. The rationale lies in the fact that European power systems are increasingly shaped by wind and solar power, leading to greater fluctuation in production patterns. It is therefore essential to refine the design of short-term markets to increase system flexibility.
By improving the design of short-term markets (day-ahead, intraday and balancing markets and imbalance settlement rules) – which is where the demand for flexibility is met – we can improve price formation and thus efficiently provide system flexibility.
The Pentalateral Energy Forum (PLEF), with representatives from Austria, Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland, is currently working on options to render their power markets more flexible. This study, commissioned by Agora Energiewende, aims to contribute to the ongoing debate by identifying key market design elements that efficiently enable flexibility and further market integration.
Robert Vergeer and Thijs Scholten