3 minute read
A collective e ort to create the market we need
CIRCULATION 6000
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FORESIGHT Climate & Energy ISSN 2446-094X
The electricity sector has come a long way since many of the rules that govern it were written. Distributed energy resources, battery storage and electric vehicles had not yet appeared on the scene when the regulations and frameworks that dictate how power is produced, transmitted and consumed were put in place.
The rules were also designed with the sole aim of ensuring security of supply in a way that also guaranteed a pro t for generators, with the need to slash greenhouse gas emissions an afterthought at best.
There have, of course, been tweaks made here and there as new technologies emerged and made inroads into the energy mix, but the rulebook has ultimately become outdated. It no longer re ects the needs of the 21st Century’s energy landscape nor the vision for a decarbonised economy by 2050.
Russia’s invasion of Ukraine in early 2022 put Europe’s lawmakers on high alert and sparked talk of a signi cant overhaul of the rules and regulations as energy prices spiked.
However, major market changes such as those touted tend to spook investors. Any considerable upheaval could delay the energy transition while those who hold the purse strings gure out the best place to put their money. Therefore, smaller upgrades to the market design will instead help the market make business plans for zero-carbon energy sources.
And the markets can be powerful when the stars align. The signicant cost reduction of renewables through technology advancements and e ective regulation is a testament to that. The sharp rise in power prices seen in the wake of Russia’s invasion of Ukraine has made clear the need to incentivise cheaper and cleaner green energy.
This is the central message you will nd throughout the pages of the 16th special print issue of FORESIGHT Climate & Energy. By installing market frameworks for power purchase agreements or contracts for di erence, investors will be able to con dently back clean power projects. Similarly, crafting market regulations speci cally for storage capacity will help bolster the business case for solutions of all shapes and sizes.
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We also look at whether a change in the way electricity prices are set is needed so that consumers can bene t from cheap renewable energy. And we delve into the role the demand side can increasingly play in the transition if the rules are in place to allow it. Incentivising exibility on the part of consumers and promoting digital technologies around the edge would mean valuable clean energy can be used more e ciently.
The electricity market can no longer be designed purely around pro t and security of supply. It also needs to facilitate the transition to zero carbon.
David Weston EDITOR-IN- CHIEF
A QUESTION OF MARKET CONTROL
With ever more diversi ed grids, questions over who should operate them are growing
PAGE 6
A Contract Makes
ALL THE DIFFERENCE
Governments are examining why CfDs are so e ective in encouraging renewables investments
PAGE 32
EUROPE STANDS AT A MARKET DESIGN CROSSROAD
Discussions on redesigning the market range from evolutionary to revolutionary
PAGE 14
Markets Policy Finance
GOVERNMENTS BID TO FIX AUCTION DESIGN
Authorities need to tempt developers back to renewables auction rounds
PAGE 24
Business
LIVING ON THE EDGE
Improving energy use at the edges of the grid could avoid expensive physical upgrades
PAGE 42
The Big Picture
REWILDING OUR WORLD
Estonia’s peatlands are being restored to provide a service to the country’s citizens once more
PAGE 40
Technology
THE RISE OF THE FLEXERS Rules on how the demand-side can help in the energy transition are taking shape
PAGE 50
MARKETS BRACING FOR A STORAGE STORM
The rules around storage need to catch up with the market’s demands
PAGE 58
THE NEXT INDUSTRIAL REVOLUTION
China and the US will dominate the storage market, impacting growth and regulations elsewhere
PAGE 66
