An Evaluation Framework to Assess the Performance of Electricity Market Models

Electricity markets around the world are undergoing a rapid transformation from a centralized structure involving large-scale fossil fuel-based generation to several small-scale, widespread generating technologies such as the variable renewable energy. The existing electricity markets were developed for conventional generators; integration of more VRE into grids can lead to adverse events within these market models. As a result, new market designs are being developed to reform the structure of existing electricity markets. In this paper, an evaluation framework is proposed to aid decision makers in assessing the performance of the newly developed electricity markets. The proposed evaluation framework assesses a market model based on five desirable attributes of electricity markets: Economic Efficiency, Macroeconomic Stability, Sustainability, Revenue Stability, and Viability. Furthermore, the applicability of the proposed market evaluation framework is demonstrated using various market designs.