Do you understand how the electricity market works?

small_e_blizz.gifElectricity market reform is an ever-lasting issue. Most countries of the world are involved in processes of liberalization of their electricity markets. We all hear about promoting competition, natural monopolies that need to be regulated, incentives to reduce costs and energy losses, infrastructure expansion, security and quality of supply, grid access tariffs… Electricity market becomes a complex universe that requires some basic knowledge of regulatory principles.

Renewables and energy efficiency projects are directly affected, as they are not anymore a marginal part of the generation mix; its integration to the electricity market becomes an important issue. To give an example, many countries promote renewable electricity generation through primes that are added to the market price. There are several types of markets, such as cost- and price-based pools, mandatory and voluntary markets, as well as bilateral and single buyer markets. How is formed the market price in each case and how to participate?

As well, the new distributed generation faces a big barrier which is the required grid development to allow electricity to be injected to the grid. Who pays for it? Should it be socialized or fully charged to the project? Is there any incentive scheme or regulation applicable for investments and grid expansion?

EUEuropean Union has approved a Directive to promote the use of renewable energy so as to reach 20% of the final energy consumption share. That means around 35% renewable electricity generation. With such amount of variable generation, it becomes fundamental to strengthen cross-border interconnections and fine-tune balancing energy exchanges. How does it work, at which price?

Our Partners from Leonardo Energy are going to launch an e-learning module with the objective to create knowledge in and understanding of regulation issues and I think it is definitely worth to check that out. Market design, regulation of transmission and distribution activities, price control, cost of capital, efficiency assessment, quality of supply regulation and electricity pricing are the main contents of this training module. It is free and universally accessible, as it is delivered through 8 webinars from October 2009 to February 2010. Upcoming modules will tackle transmission system operator issues such as cross-border trading, congestion management and balancing markets.

For further information and registration have a look on the Leonardo Energy Training Module on Electricity Market Regulation.

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