Spring/Summer 2023
The electricity sector has come a long way since many of the rules that govern it were written. Distributed energy resources, battery storage and electric vehicles had not yet appeared on the scene when the regulations and frameworks that dictate how power is produced, transmitted and consumed were put in place
The electricity sector has come a long way since many of the rules that govern it were written. Distributed energy resources, battery storage and electric vehicles had not yet appeared on the scene when the regulations and frameworks that dictate how power is produced, transmitted and consumed were put in place.
The rules were also designed with the sole aim of ensuring security of supply in a way that also guaranteed a profit for generators, with the need to slash greenhouse gas emissions an afterthought at best.
There have, of course, been tweaks made here and there as new technologies emerged and made inroads into the energy mix, but the rulebook has ultimately become outdated. It no longer reflects the needs of the 21st Century's energy landscape nor the vision for a decarbonised economy by 2050.
Russia’s invasion of Ukraine in early 2022 put Europe’s lawmakers on high alert and sparked talk of a significant overhaul of the rules and regulations as energy prices spiked.
However, major market changes such as those touted tend to spook investors. Any considerable upheaval could delay the energy transition while those who hold the purse strings figure out the best place to put their money. Therefore, little tweaks to the market design will instead help the market make business plans for zero-carbon energy sources.
And the markets can be powerful when the stars align. The significant cost reduction of renewables through technology advancements and effective regulation is a testament to that. The sharp rise in power prices seen in the wake of Russia’s invasion of Ukraine has made clear the need to incentivise cheaper and cleaner green energy. ...
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