The Decarbonised Electricity System of the Future: The ‘Two Market’ Approach

Abstract

This paper explains why current electricity markets are not fit for purpose and proposes a new consumer-driven two-market design to support very high penetrations of intermittent renewable energy. The structure encourages demand flexibility; enables consumers to choose what mix of energy they wish to purchase from the two markets (as available renewable energy or on demand flexible energy); encourages them to shift their demand to the as available market (and to acquire storage and other load-shifting appliances); provides a market-basis for financing flexible plant; and offers an exit strategy for government subsidies to renewables and flexible plants

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