Abstract

Future electricity market design needs to address a set of challenges to provide for efficient investment, supply and consumption decisions. The objective of this paper is to sketch those problems and challenges embedded along the electricity value chain and identify how they are altered when shifting from a pre-dominantly centralized nuclear and fossil system towards a system with a mix of central and decentralized elements as well as a high share of intermittent renewable generation. Of particular concern is the mismatch of incentive structures (i.e. between highly dynamic wholesale markets setting incentives for large scale investors and average tariff structures on the end user side setting incentives for prosumers) as well as the security of supply dimension (i.e. shifting from a public good character within regulated systems towards a potential private good in a system characterized by smart control structures). Based on those structures we aim to derive potential market and price setting designs suited for a future electricity market. Frank C. Krysiak and Hannes Weigt