Electricity market re-design in Great Britain: A proposed new design and lessons on implementation

Energy systems are changing rapidly around the world. Global public discourse has moved behind a more decentralised, renewable energy and energy efficiency based energy system, primarily because of two technology changes. Firstly the falling costs of renewable electricity technologies. Secondly better control technologies that are enabling new ways to operation and manage the system including: two-way electricity movement; interconnection from the household through to regional markets and networks; smart grid applications; and more flexibility through demand side response/storage. This is changing the nature of power networks and creating new business models/patterns of ownership/social preferences.

Most electricity markets were set up to suit fossil fuel and nuclear generation, but zero marginal cost renewable electricity is: displacing fossil fuels; bringing down peak prices; and reducing the need for nuclear baseload. Many developed countries now have 20% or more of their electricity from renewable sources, and are increasingly considering how their markets are designed to reflect this shift in generation. This includes the EU, where the European Commissions is proposing changes to the design of electricity markets to focus on flexible generation, demand side response, storage. The shift is towards integrated energy systems and networks that are capable of maximising local supply and demand opportunities through local energy markets whilst also providing flexibility through interconnectors and efficient national and trans-national markets. All of these measures will require changes in the governance of electricity systems to allow the new technologies and measures to operate effectively.

Having an energy infrastructure that is fit for purpose is of fundamental importance to a low carbon future. A key challenge is accommodating new technologies within the existing energy supply network, whilst developing it for the future. Beyond the technologies this has to include the wider market and governance framework which will shape how power networks develop. In light of this and within the context of the EU level changes, this PhD would explore market designs of power networks in Great Britain. It would analyse what market designs for future electricity systems are already in place, or about to be put in place globally. This would include what attempts at local energy markets have occurred in GB. It would also explore any barriers which might exist in GB governance to such market designs; and it would explore what would need to be changed if GB was to alter its market design to suit a future power system.