Integrating electricity markets across regions is vital both for the integration of renewable energies and to control production and distribution costs. But cross-border electricity trade continues to be perceived as potentially risky to security of electricity supply. In response, this report suggests the need for strong co-ordination of electricity security regulatory frameworks across jurisdictions.
Based on the experience of International Energy Agency (IEA) member countries, this paper identifies two ways to integrate markets over wider geographic areas. The straightforward solution is to consolidate markets and system operations. For instance, merging system operators ensures that the same rules for electricity system security apply across all consolidated control areas. When this is not feasible, because of institutional barriers, co-ordinating markets and system operations can be improved
One key finding of this report is that the integration of electricity security rules often lags behind integration the integration of markets themselves. This hinders the further developments needed to accommodate renewables. Governments can work together to coordinate electricity security regulations and develop the seamless power markets needed to attain decarbonisation targets.