What may future electricity markets look like?

TL;DR

This paper explores the evolving landscape of electricity markets, emphasizing the need for adaptable, holistic designs that accommodate renewable energy, decentralization, and technological advances to ensure future relevance.

Contribution

It provides a comprehensive analysis of past, present, and future electricity market structures, highlighting challenges and opportunities for future market design.

Findings

Renewable integration challenges require flexible market designs.

Technological and social advances expand options for future markets.

Holistic, socio-techno-economic approaches are essential for future electricity markets.

Abstract

Should the organization, design and functioning of electricity markets be taken for granted? Definitely not. While decades of evolution of electricity markets in countries that committed early to restructure their electric power sector made us believe that we may have found the right and future-proof model, the substantially and rapidly evolving context of our power and energy systems is challenging this idea in many ways. Actually, that situation brings both challenges and opportunities. Challenges include accommodation of renewable energy generation, decentralization and support to investment, while opportunities are mainly that advances in technical and social sciences provide us with many more options in terms of future market design. We here take a holistic point of view, by trying to understand where we are coming from with electricity markets and where we may be going. Future electricity markets should be made fit for purpose by considering them as a way to organize and operate a socio-techno-economic system.