Background

Electricity network and markets were designed based on a long history of dealing with various forms of dispatchable generation, as well as a predictable electrical load pattern, in a centralized top-down manner. Little uncertainty was involved on both generation and demand side, hence allowing for a straightforward design of electricity markets accounting for the necessity of a forward optimal allocation, complemented by a real-time mechanism supporting actual power systems operations. Electricity demand was treated as inflexible while driving electricity generation. This conception of electricity markets is obviously challenged today, with increasing uncertainty on both the generation and demand side:
 
 
On the generation side, uncertainty is brought in by renewable energy production, their variability and limited predictability. Its substantial impact on market prices and power flows was underlined and quantified over the last few years

  •  On the demand side, electricity consumers are gradually turning into “proactive prosumers” thanks to local production units like solar panels, complemented by newdemand response capabilities related to advanced control strategies and non time-critical loads like heat pumps and electric vehicles.

  •  Status quo is not an option! - and aiming to stick to a totally centralized market mechanism with support from increasing transmission capacity (to maintain the fiction of a copper plate) may only lead to substantial hidden costs for society. There is a consensus on the fact that electricity markets ought to change substantially in the short to medium term, in a more or less smooth manner depending upon the upgrading of existing expertise and modifications to be performed in terms of regulatory framework.