Leonardo Meeus

Distribution System Operators (DSOs) in Europe increasingly employ flexibility markets to manage overloaded grid lines or transformers. One of the main concerns is that grid users will use these flexibility markets to deliberately create and solve congestion, also known as inc-dec gaming. However, the relevance of this game has not yet been explored for distribution grids. We propose a bilevel model with a three-stage electricity market to examine the inc-dec game in flexibility markets at distribution level and redispatch markets at transmission level. We show that the proposed model can be formulated as a Mathematical Program with Equilibrium Constraints (MPEC) and converted into a Mixed-Integer Linear Program (MILP). We demonstrate the model using a stylized example of renewable energy curtailment due to limited capacity at the transmission and distribution network interface, which is a typical congestion situation in Europe. In our test case, the results show that strategic agents can game flexibility markets. We also find examples of the price-setter game and the inc-dec games using redispatch markets. We compare the characteristics of these games with the existing literature to help regulators and system operators to detect them in practice.

The support of decentralized energy resources under the Fit for 55 package and the REPowerEU plan places distribution grid users and distribution system operators (DSOs) at the center of the future European energy system. Also, the interaction between both types of agents is gaining importance for two reasons. First, DSOs face challenges connecting these new grid users to their network, leading to an increased need for grid investments and congestion management measures. Second, engaging these new grid users can bring opportunities for DSOs to manage their network and its possible congestion more efficiently.

Regulatory sandboxes are generally seen as an important tool to make policy and regulation evolve with the changes in our energy system and to create an equal playing field for new technologies and business models that arise with the energy transition. Although an increasing number of legal frameworks on regulatory sandboxes are being implemented in Europe, the pioneers in the Netherlands decided to close their sandbox program. These contradictory events lead to questions about the potential of regulatory sandboxes to bring innovation to the European energy sector. This paper contributes to this discussion by examining the experiences with regulatory sandboxes in Austria, Belgium, France, Germany, Great Britain, the Netherlands, Norway and Spain. We compare approved sandbox projects based on their scope and regulatory derogations to identify areas of innovation and regulatory learning brought by regulatory sandboxes. We also examine the legal frameworks of the concerned countries to evaluate the interaction between the implementation of the framework and its potential to bring innovation. In this way, we develop best practices on the topics and derogations of regulatory sandboxes and their implementation frameworks.

The rise of intermittent renewable energy generation, the coming mass penetration of electric vehicles and moves to decarbonise the gas grid are leading to widespread innovation experiments within electricity systems and their associated markets

In this review paper, we select four important waves of new entrants that knocked on the door of European electricity markets to illustrate how market rules need to be continuously adapted to allow new entrants to come in and push innovation forward. The new entrants that we selected are utilities venturing into neighbouring markets after establishing a strong position in their home market, utility-scale renewables project developers, asset-light software companies aggregating smaller consumers and producers, and different types of communities. We show that well-intentioned rules designed for certain types of market participants can (unintentionally) become obstacles for new entrants. We conclude that the evolution of market rules illustrates the importance of dynamic regulation. At the start of the liberalisation process the view was that we would deregulate or re-regulate the sector after which the role of regulators could be reduced. However, their role has only increased. New players tend to improve the sustainability of the electricity sector in environmental, social, or economic terms but might also present new risks that require intervention by regulators.