Collaborative Framework on Enhancing Dialogue on High Shares of Renewables in Energy Systems: Energy Markets and Regulations

As a key driver of clean energy transition, achieving high shares of renewable energy in the energy mix would require rethinking the energy markets in various aspects. Strengthening energy markets and regulations would facilitate the penetration of variable renewable energy (VRE) while securing stable enabling frameworks that contribute to long-term investment security. This may help optimise energy system planning and operation, and encourage renewables-based cross-border interconnections.

Adapting market design to high shares of VRE shows that enhanced flexibility for future power systems is an essential consideration. Electricity markets need to be re-designed to integrate all available resources, reward flexibility, and promote long-term investment. 

Increasing time granularity in electricity markets with a well-functioning spot market as a key market design innovation that addresses the variability and the uncertainty of the VRE share in the grid.

Collaboration between actors, proactive regulation and new market rules are needed to make power system structures fit for a renewable-based energy system. The right mix of collaboration, regulation and markets will depend on the specific context, but all three components can be expected to play a relevant role in re-designing power system structures.

A new power system organisational structure, fit for the renewable era, that can support low-cost renewable generation and long-term investments in system adequacy, complemented by diverse and flexible generation options to ensure a reliable power system to support the energy transition.

Experience of IRENA Members shows that regulations governing the energy markets must adapt to the rapidly evolving needs and conditions in a timely manner. In many countries, power sectors are experiencing profound changes that include low carbon technologies in the generation mix; the decentralisation of generation capacity; an increase in regional inter-connection and market integration; consumer empowerment; and an increase in the availability and utilisation of a diversity of distributed energy resources.

Energy markets and regulations must reflect each country’s circumstances, ensuring reliable services at reasonable prices while sharing system costs and benefits fairly and equitably. An integrated energy market could be a cost-effective way to ensure secure and affordable energy supplies. Through coordinated energy market rules and cross-border infrastructure, energy can be produced and delivered to consumers on a national and regional basis.

The meeting discussed experiences and best practices on integrated energy markets and regulations to facilitate the penetration of renewables and secure stable regulatory frameworks that contribute to long-term investment security for achieving high shares of renewables. The meeting aimed to facilitate peer-to-peer dialogue on designing and regulating energy markets promoting high shares of renewables in the mix from the perspective of different stakeholders including regional coordination centres, regulators, transmission system operators, power markets, project developers, engineering companies and national authorities.

Meeting participation by invitation only. 

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