Electricity Market Design and Analysis for a Sustainable Transition

Why do we have markets for electricity? How do they function? This introductory course explains how incentives shape outcomes in the electricity market. It brings out the implications for businesses and society of electricity pricing in the shadow of the energy transition.

The course aims to provide a comprehensive overview of the electricity market’s role in ensuring an efficient electricity supply and addressing key public questions, such as

• What is the purpose of the electricity market?
• Why do electricity prices vary by location?
• How can electricity prices surge despite low production costs?
• Are there alternative ways to sell electricity?
• Why is international electricity trading important?

The course emphasizes the role of economic incentives in shaping market behavior and addresses critical issues such as market power and its consequences. You will also explore the inefficiencies stemming from unpriced aspects of energy supply and the role of regulation in mitigating these inefficiencies.

As the global push toward decarbonization accelerates, the course delves into the challenges posed by large-scale electrification, the implications of climate legislation for energy systems, and the impact of protectionist national policies.

The course offers a comprehensive introduction to the electricity market, provides you with analytical tools for independent analysis and brings you to the forefront of current energy policy debate.

You will learn

• Describe the interaction between the electricity system and the electricity market.
• Explain how the electricity market can increase the efficiency of electricity supply, e.g. with respect to market integration.
• Show how market power reduces the efficiency of the electricity market.
• Categorize fundamental market imperfections and describe their solutions.
• Explain economic and political challenges associated with the green transition.
• Apply economic tools to analyze the electricity market and examine how changes to the electricity system and regulation affect market outcomes.