The EU has ambitious policies for decarbonization of the electricity sector. Due to recent technological developments, wind power already represents a significant share of the generation mix in some European countries. As a result, short-term electricity markets and balancing arrangements must be redesigned to accommodate the increasing variability and unpredictability of generation in an economically efficient way, without endangering system security. Currently, Europe is characterized by heterogeneity of national market designs for short-term electricity markets. This thesis analyzes the efficiency of short-term markets in Europe, in a national context and in the context of cross-border trade. It highlights the effects of interactions between the various short-term markets and balancing arrangements and shows how current market designs and regulations cause distorted price signals. This thesis argues the case for harmonization of national market designs to improve the economic efficiency of cross-border trade in short-term markets. The current initiatives towards the establishment of an Internal Energy Market in Europe are insufficient to ensure economic efficiency and system security of the European electricity system of the future, in which intermittent renewables will play a dominant role.
Delft University of Technology. Delft (Países Bajos)
11 September 2014