Regulation and market reform: The essential foundations for a renewable future

Abstract

Measuring renewable generation deployment in terms of megawatts installed over time, offers a somewhat restricted viewpoint from which to understand the interactions of technical, market, regulatory and economic factors that ultimately determine the success or failure of low carbon generation policy. This chapter examines some of the fundamental technical and economic differences between power systems comprising renewable and conventional technologies and why these necessitate economic, as well as regulatory, interventions in order to provide a viable investment environment for new capacity. Measures to mitigate the impact of capacity duplication on conventional generation, required to maintain power system reliability, are also considered in this context. The validity of this analysis is demonstrated through a review of the very different Russian and US markets, where both financial support and market reform are shown to be essential for successful deployment of renewables whereas neither, on its own, is sufficient.