20220531-IEA-Steering_Electricity_Markets_towards_a_Rapid_Decarbonisation_115页_8mb

Steering Electricity Markets Towards a Rapid Decarbonisation

Chapter 1: Optimising wholesale markets

• Key principles: wholesale markets must provide efficient price signals to align system operation with decarbonization goals.
• Recommendations: Refine time resolution, improve locational signals, and ensure long-term contracts do not impede optimal dispatch.

Chapter 2: Market instruments to accelerate decarbonisation

• Decarbonisation policies: Carbon pricing and long-term auctions are essential for reflecting the cost of negative externalities and ensuring revenue certainty.
• Recommendations: Balance long-term revenue certainty with market integration, enable value-based pricing, and adapt instruments to support low-carbon dispatchable technologies.

Chapter 3: Distributed energy resources

• DER integration: DER reshape electricity systems, offering flexibility and resilience but requiring better market visibility through digitalisation.
• Recommendations: Encourage digitalisation, design time-variant tariffs, and facilitate DER participation in markets using aggregators.

Chapter 4: Storage in decarbonising power systems

• Storage role: Storage provides flexibility and supports VRE integration but requires market design changes to reflect its unique capabilities.
• Recommendations: Rationalise costs, compensate fast-response time, and enhance locational signals to maximise storage deployment.

Chapter 5: Adequacy mechanisms

• System security: Adequacy mechanisms like energy price adders, capacity remunerations, and regulated procurement ensure sufficient resources for reliable operation.
• Recommendations: Use price adders and CRMs to complement market signals, define capacity contributions from all technologies, and redefine critical hours for capacity planning.

Chapter 6: Retail market regulation

• Retail choices: Retail markets must balance consumer protection with market efficiency and innovation.
• Recommendations: Develop innovative tariffs like capacity subscriptions, establish prudential regulation for retailers, and leverage technology for consumer participation.

Chapter 7: Electricity system planning

• Forward-looking planning: Comprehensive planning supports decarbonization and grid expansion, addressing uncertainties like VRE deployment and electrification.
• Recommendations: Apply holistic planning approaches, conduct detailed cost-benefit analyses, and enhance stakeholder engagement to drive efficient investments.