We cannot influence the weather, not now, nor in 2050. The same largely applies to the supply of wind and solar electricity. This has far-reaching consequences for the way in which we trade in electricity. In the past, supply followed demand, now it will often be the other way round. Market players need to cooperate more instead of competing against each other. Which policy supports that? TNO conducts research into how energy markets perform and the associated regulatory framework.
For more information on our research on how energy markets perform and the associated regulatory framework, get in touch with Sebastiaan Hers.
Energy markets play a crucial role in the proper functioning of our energy system. The market brings supply and demand together. A well-designed market can provide the right match between supply and demand, low prices, security of supply and sustainability.
Today's energy markets arose at the time of liberalisation in the 1990s whereby the main goal was to stimulate competition. Technological innovations are now changing the character of energy markets. Balancing, for example, is becoming increasingly important now given the lack of controllability of the production of electricity from the sun and wind.
In the past supply followed demand, but now it is often the other way round. Well-designed markets support these developments. Markets then change along with the desired objectives: innovation for sustainability and balancing.
The separate markets for electricity, gas and heat are becoming increasingly intertwined, systems are integrating. For example, buildings can be heated in many different ways: by gas, by electricity, via a heat network or by hybrid combinations, in which the different sources, sometimes right down to the capillaries, can be coordinated with each other. Poorly functioning markets stand in the way of the goal of a reliable, affordable and sustainable energy supply. Appropriate regulation prevents that.
In striving for an integrated energy system, individual markets must take account of each other. Our energy transport is designed to prevent peak loads, while balancing actually requires high energy consumption during surpluses.
A well organised market promotes efficient balancing. One example is the electric car, which also functions as a battery and can supply power for a fee. And surpluses of electricity can be converted into heat. In order for all this to work together, new insights are needed into technologies, markets, grids and regulations.
Innovations require a level playing field. New, often innovative market players must be able to enter the market without hindrance and operate under the same conditions as incumbents. A An example is the fourth generation heat networks where new parties are also emerging for generation, distribution and this to different types of customers. Good market regulation must ensure a fair energy transition here.
New regulation of the markets must stimulate sustainability and innovation. The design of such regulation is complex. TNO can contribute to solving this. On the basis of the aims of the organised market and the expected technological developments, TNO can propose various forms of regulation that lead to a clean, sustainable and innovative energy supply at low prices.
TNO combines in-depth knowledge of technologies, financial and social aspects, infrastructure, markets and the energy system as a whole, and government policy-making to enable all these questions to be answered tight up to system level.
The current system of green certificates does not provide sufficient insight into when wind or solar energy has been produced. TNO has developed a method in cooperation with partners Eneco, KPN and trading platform ETPA to link certificate trading to the trade in time-based energy products. This enables consumers to gain detailed insight into what energy they actually use at any time of the day.
Our country must have a climate-neutral energy system by 2050. The question is whether we can achieve that goal without radically reforming the economy or taking other sweeping measures. An energy supply without CO2 emissions is certainly conceivable, but clear choices are needed. TNO has developed two scenarios for identifying the consequences of different choices.
Achieving the Paris Climate Agreement goals requires trillions of dollars in investments in sustainable energy infrastructure globally in the coming decades. The TNO research and paper explores the important role that institutional investors can play in providing these required investments, and thus in the transition to a clean energy system.