On integrating large shares of variable renewables into the electricity system

In recent years increasing shares of variable RES (renewable energy sources) have changed the structure of electricity markets in Western Europe, especially in Germany. The core objective of this paper is to provide insights on the conditions to integrate even larger quantities of variable RES into the electricity system by using market-based principles and how, straightforward, a sustainable electricity system could work. Our major finding is that we suggest a market-based approach to ensure that competitive forces rather than governmental interferences as capacity mechanisms shape the future of the energy system. The major conclusions of this analysis are: The transition towards a competitive and sustainable future electricity system will be based on an approach of “new thinking” which is to accept a paradigm shift in the whole electricity system. This includes switching to a more flexible and smarter system allowing a greater scope for demand participation, storage options and other flexibility measures. Developing such a system implies also that no politically motivated capacity mechanisms are needed.