Electricity Markets and Renewables: A Survey of Potential Design Changes and Their Consequences

The design of wholesale electricity markets is complex. Unlike other commodities, electricity cannot be stored in a warehouse. Electricity generation must occur simultaneously with consumption, whereby electricity delivery is based on laws of physics. Under the structure of regulated electricity rates, consumers are generally not directly exposed to the instantaneous cost of the delivered electricity. Countries around the world have successfully managed these complexities by restructuring the electricity sector with markets that allow wholesale electricity suppliers to compete in providing energy, reliability services, financial services, and sometimes capacity. Still, wholesale electricity market restructuring has certainly been a moving target.