In progress Risks and Challenges for Electricity Market Design in Integrating Sustainable Energy Sources



With the growing share of sustainable energy sources, electricity markets experience increasing uncertainty and volatility. As with other financial markets, information flows are seen to play a key role in the decision making process and hedging activities with forward contracts serving as a mean for risk reduction in liberalized electricity markets. Furthermore as electricity storage is not yet economically viable, markets experience a range of producing technologies with different constraints. Forward price models can however not be universally applied across all electricity markets and with the ongoing decarburization of the electricity sector, there is not yet a definitive view on how decision making, expectations and risk premiums vary over markets and over time.

We contribute to the discussion on the design of the future electricity market and raise challenges and conditions for integrating larger shares of renewable energy sources via a multi-method approach. The work builds on equilibrium pricing models in a heterogeneous technology agent setting. Next, we simulate various conditions in an experimental market setting and validate empirically. This allows us to spur innovation as it allows market structures to be evaluated under various real-world conditions and alter market design both from market and individual perspective. Analyzing these systems, relationships between market participants, technology adaption and changes to market behavior provide ingredients of key importance for devising a robust well-functioning electricity market, its design and its governing policies.


Market Design, Environmental Sustainability, Energy Informatics, Risk Premiums, Electricity Pricing

Time frame

2014 - 2018

Supervisory Team

Wolfgang Ketter
Professor of Next Generation Information Systems
  • Promotor
Ronald Huisman
Ronald Huisman
  • Copromotor