Why the sustainable provision of low-carbon electricity needs hybrid markets
Keppler, Jan-Horst; Quemin, Simon; Saguan, Marcelo (2022), Why the sustainable provision of low-carbon electricity needs hybrid markets, Energy Policy, 171, p. 113-273. 10.1016/j.enpol.2022.113273
Type
Article accepté pour publication ou publiéDate
2022Journal name
Energy PolicyVolume
171Publisher
Elsevier
Pages
113-273
Publication identifier
Metadata
Show full item recordAuthor(s)
Keppler, Jan-HorstLaboratoire d'Economie de Dauphine [LEDa]
Quemin, Simon
Saguan, Marcelo
Abstract (EN)
Deep decarbonization of energy systems poses considerable challenges to electricity markets and there is a growing consensus that an energy-only design based on short-term marginal cost pricing cannot deliver adequate levels of investment and long-term coordination across actors and sectors. Based on the instructive example of the evolution of European electricity market designs, we discuss several shortcomings of energy-only markets and illustrate how ad-hoc policies that intend to address them have limitations of their own, notably a lack of systemwide coordination. Second, we describe how the sheer scale and nature of deep decarbonization targets requiring massive investment in capital-intensive low-carbon technologies exacerbate these issues. Ambitious emission reduction targets thus require an evolution of market design towards hybrid regimes. Hybrid markets separate long-term investment decisions from short-term operations through a balanced and differentiated use of competitive and regulatory design elements to coordinate and de-risk investment. Finally, a historical analysis of the evolution of different electricity market designs shows how hybrid markets constitute contemporary forms of long-run marginal cost pricing that are appropriate for meeting deep decarbonization targets with reduced uncertainty and hence lower private and social costs.Subjects / Keywords
Electricity market; Deep decarbonization; Hybrid market design; Long-term contracts; Low-carbon investmentsRelated items
Showing items related by title and author.
-
Cometto, Marco; Keppler, Jan-Horst (2012) Rapport
-
Boureau, Charlotte; Le Pen, Yannick; Phan, Sébastien; Keppler, Jan-Horst (2014) Document de travail / Working paper
-
Keppler, Jan-Horst; Le Pen, Yannick; Phan, Sébastien (2016) Article accepté pour publication ou publié
-
Cameron, Ron; Marcantonini, Claudio; Keppler, Jan-Horst (2011-07) Rapport
-
Finon, Dominique; Keppler, Jan-Horst; Roques, Fabien (2017) Article accepté pour publication ou publié