Electricity Market Design

Electricity markets play a central role in balancing supply and demand, guiding operational decisions and shaping investment outcomes. As systems change with higher shares of variable generation, greater decentralisation and evolving patterns of electricity use, the ability of market designs to deliver secure and affordable electricity has never been more critical. If market arrangements do not keep pace with these developments, the functioning of electricity systems could become more uncertain and more costly.

This report provides a cross-regional assessment of how wholesale electricity markets and their complementary policy mechanisms are performing today. We find that short-term markets have continued to operate reliably and efficiently, translating real-time conditions into meaningful price signals even as system complexity grows. Medium- and long-term markets, however, face persistent gaps in liquidity and accessibility, which can make it harder for participants to manage risk and invest with confidence. Complementary mechanisms have become structural features of many systems, helping to support resource adequacy and decarbonisation objectives, but their effectiveness and cost efficiency depends on designs that work in concert with market signals.

The analysis highlights that coherent evolution across market layers and mechanisms is essential to maintain secure, affordable and sustainable electricity systems. The report concludes with insights to guide policy makers as they refine market arrangements and ensure that markets remain resilient, efficient and responsive as system needs continue to change.