Toward a new market design with long term arrangements: Key issues for research raised by the European Commission proposals

The European Commission has launched a consultation and released proposals for a reform of electricity market design. One of the key new elements is the greater role for long term contracts, both to offer better hedging opportunities to consumers and to support investment in low carbon and flexible resources.

Different types of long-term arrangements already exist, ranging from capacity based mechanisms such as capacity markets, , or energy based contracts such as forwads, CfDs or PPA. There has been much  discussion on the design of such long term arrangements, in order to preserve efficient price signals and liquidity in forward markets. A related issue that has to date received less attention in public debates and academic research is the issue of the allocation of these long term arrangements costs and their potential effect on the market parties, and on the electricity system.

The objective of the conference will be to discuss the recent proposals from the European Commission in the light of academic research – with a particular focus on the question of the role of long term arrangements, in lien with the CEEM research program. The Chair European Electricity Markets (CEEM) at the University of Paris Dauphine – PSL has indeed launched a new research program over 2023 and 2024 structured around: 1) a series of workshops and conferences and 2) a call for papers for publication in the CEEM working papers and peer reviewed journal articles.

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