Seamless Power Markets

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 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. 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 co-ordinate electricity security regulations and develop the seamless power markets needed to attain decarbonisation targets.