In the short-term, renewables should be fully integrated in the market and balancing prices should reflect full system costs. The current European electricity market values capacity and flexibility only indirectly, and we lack the required mechanisms to support the integration of large shares of RES in a way that optimises cost-competitiveness.
By setting the right incentives for market parties to be balanced during real- time operation, demand for flexibility will occur and traders, generators and customers will contribute better to system needs and to system security, at a reduced cost to end-consumers. This approach should be designed in order to allow cross-border participation to any mechanism, and should be complemented with appropriate hedging instruments.
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