A Pöyry Point of View exploring the electricity market design of the 21st century.
Vantaa, Finland, 29-10-2015 — /EuropaWire/ — The electricity market design is changing, the old paradigm of a stratified value chain now needs adjusting. Pöyry discusses the moves that need to be made so that innovative technologies and business models can be deployed within the electricity market.
A new Pöyry Point of View report argues that European Electricity Regulators and Policymakers need to recognise that the electricity market value chain paradigm that underpins much of their policies and philosophy is no longer fit for purpose. At best inaction is causing inefficiencies – at worst, it is stifling the deployment of potentially innovative technologies and business models.
‘Building the Modern Electricity Network: Regulation and Innovation’ details how institutions and organisations should be encouraged to bridge the artificial divisions between sectors in the electricity industry. The piece explains that although current market divisions are beneficial, they also create situations where one sector’s cause is another’s problem.
Economic benefits from introducing competitive markets in generation and supply, breaking up vertical integration and regulating the networks are widely recognised. But there are now growing signs that this market structure is becoming outdated even as the last few countries in Europe adopt it. The very system that was devised to introduce competition and innovation now risks stifling the next generation.
Author of the report and Pöyry Consultant Phil Hare said,
In the last decade there has been a significant move from stable power systems dominated by fleets of large thermal plants that could deliver many necessary system support services, such as frequency control and voltage regulation, that were needed to keep the system running.
Many of these plants have retired, or will retire soon, and at the same time renewables are growing rapidly. Many of the renewables are intermittent and many of the projects are connected to distribution networks operating at lower system voltages. The concept of a homogenous network is now outdated with new challenges and opportunities becoming the norm.
In working towards the EU 2020 renewables targets and pursuing longer-term decarbonisation ambitions these trends are only going to accelerate. Future power systems will be characterised by more decentralised generation, widespread intermittency in all its guises, more active customer engagement and flexibility, with far more pressure on networks.
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SOURCE: Pöyry PLC