In recent years, power markets have experienced significant price volatility, ranging from record-high peaks to negative prices. While such spikes are an inherent feature of marginal pricing, they have nevertheless sparked concerns over windfall profits and the fair allocation of costs between consumers and suppliers. Many countries have implemented various measures to curb high prices, though some argue that these controls have gone beyond what is necessary. Such short-term interventions must be thoughtfully designed, strictly temporary, and structured to avoid creating long-term distortions in investment decisions.
- Revisiting and adapting Power Purchase Agreements (PPAs) is essential to address the complexities of modern energy systems. As renewable energy penetration increases, PPAs must evolve beyond purely financial contracts to incorporate essential grid-service obligations, such as forward capacity auctions, ancillary service markets (e.g., frequency restoration, congestion management), and interruptible load schemes.
- Smart meters generate vast quantities of valuable data that are crucial for the new power systems, but quantifying their return on investment can be challenging because the benefits accrue mainly through avoided costs rather than direct revenue streams, making the data itself the principal asset. Thus, how regulators manage the vast quantity of data will be an important part of regulatory debate in the years ahead.
- The successful integration of new technologies necessitates clear and supportive regulatory frameworks. While regulators can benefit from best practices, the diverse national contexts should be understood to develop tailored and flexible regulatory frameworks and market strategies. We now see a change in regulatory approaches to renewable energy integration. Some jurisdictions have started to follow the “readiness” approach in managing investment backlogs. In addition, they have started to use a bundled approach in project assessment rather than evaluating each power plant separately.
