Abstract
The last two decades have seen a general trend towards the creation of supra-national or regional electricity markets, i.e. markets comprising several countries or states. Examples include the European Union’s Internal Electricity Market (IEM); the market developing in South-East Europe that will join the IEM sooner or later; the NORDEL market in Scandinavia, MIBEL in the Iberian peninsula and the Single Electricity Market (SEM) in the island of Ireland; The Central American Electricity Market (Mercado Regional de Electricidad, MER), MERCOSUR and the Andean markets in South America, which will eventually merge as well; the US’s standard market design (SMD) as an attempt to establish a common template for electricity markets across the country; the Australian National Electricity Market (NEM) or the market in the Mekong Delta region.
As in most industries, the power sector has been witness to a relentless drive to convert local into regional markets. No one can deny the need for these markets, in light of the huge challenges that lay ahead on the road to a sustainable society where scarce resources are allocated, both fairly and efficiently, at a global level.
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Notes
- 1.
Because of the need to maintain an instantaneous balance of supply and demand in a power system, as explained in Chap. 1 of this book, provision must consequently be made for operating reserves (i.e. generation whose output is able to adapt within seconds to changing system conditions). The installation of very large amounts of intermittent renewable generation (mainly wind, but also solar) is intensifying system variability, and with it the need for system reserves. Ensuring that such reserves are available at each local system calls for building many more permanently operating units than strictly necessary. With the integration of national or local electric systems, reserves could be shared under a scheme whereby each system could draw from the reserves in others whenever needed (automatically, in the case of primary reserves).
- 2.
An alternative scheme would have a single committee for the approval of any regional line.
- 3.
The complete rules of the Central American Regional Market can be found at http://www.crie.org.gt/files/rmer.pdf, in the website of the Regional Electricity Regulatory Commission, CRIE.
- 4.
- 5.
The most current legislation comprises Directive (2009/72/EC) of July 2009, Regulation (EC) No 714/2009 of July 2009 on conditions for access to the network for cross-border exchanges in electricity, Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT). There is also a Directive (2005/89/EC) of January 2006 concerning measures to safeguard security of electricity supply and infrastructure investment.
- 6.
Exceptions exist, as the mandatory target for penetration of renewables in energy consumption: 20 % by 2020, or the cap-and-trade scheme to reduce CO2 emissions by at least 20 % on 2020 with respect to 1990 emissions; both measures have strong implications on the composition of the electricity generation mix.
- 7.
- 8.
Note that principle (a) could be understood, particularly for countries at the European periphery, as just an extension of a multiplicity of individual national capacity instruments beyond their respective MSs borders, and therefore not the same thing as the—conceptually, at least—more efficient single EU-wide capacity mechanism.
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Olmos, L., Pérez-Arriaga, I.J. (2013). Regional Markets. In: Pérez-Arriaga, I. (eds) Regulation of the Power Sector. Power Systems. Springer, London. https://doi.org/10.1007/978-1-4471-5034-3_10
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