Requirements for an Efficient and Reliable Design of Electricity Markets

Due to the German Federal Government’s energy policy objectives in general and the accelerated nuclear phase-out - decided in June 2011 - in particular, the structure of electricity generation is changing fundamentally. Until now electricity was mainly provided by fossil power plants located in close proximity to the main centers of consumption. The increase of the share of unpredictable and fluctuating renewable energy sources in total energy generation, which tend be fairly remote from load centers, therefore represents a major challenge for the electricity system. As a consequence, the present market design and its legal framework need to be reevaluated and potentially modified fundamentally. In particular, the question is raised how these changes will, first, affect security of supply in the sense of investment incentives (long-term) and, second, the provision of balancing power (short-term). In this project, we aim at developing regulatory instruments which support the aspired aims. As part of this endeavour, the consideration of legal harmonization potential is understood as a crucial element against the background of a unified European electricity market.

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