#1 Fix the energy market
Re-architect how energy is priced, procured, and coordinated across the grid.
Explore the architecture
Electricity-market design space
There is no single way to design an electricity market. Every proposal embodies choices about timing, control, pricing, participation, network representation, scarcity, fairness and investment. Explore the decisions below before assessing how candidate solutions combine them into complete architectures.
Design category
Market timing
Forward-market architecture
Select oneHow should commitments for future electricity delivery be formed?
Compares no forward market, periodic auctions and continuous forward coordination.
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Forward-market architecture
Select oneHow should commitments for future electricity delivery be formed?
Compares no forward market, periodic auctions and continuous forward coordination.
Design options
3 optionsNo forward market
Resources are coordinated only close to delivery.
Periodic forward auctions
Commitments are formed through scheduled auctions and gate closures.
Continuous forward market
Commitments can be formed and updated continuously over a rolling horizon.
Market-clearing frequency
Select oneHow often should the market clear and update allocations?
Defines whether allocation occurs in batches, short intervals or continuously.
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Market-clearing frequency
Select oneHow often should the market clear and update allocations?
Defines whether allocation occurs in batches, short intervals or continuously.
Design options
3 optionsPeriodic batch clearing
Orders are accumulated and cleared together at scheduled times.
Rolling interval clearing
The market re-clears at short predefined intervals.
Continuous sequential clearing
Requests are processed as they arrive against the current system state.
Design category
Architecture and control
Control architecture
Select oneShould coordination operate as an open-loop, closed-loop or hybrid control system?
Determines whether schedules rely mainly on forecasts or are corrected using measured system feedback.
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Control architecture
Select oneShould coordination operate as an open-loop, closed-loop or hybrid control system?
Determines whether schedules rely mainly on forecasts or are corrected using measured system feedback.
Design options
3 optionsOpen loop
Schedules are formed without continuous corrective feedback.
Closed loop
Measured system state feeds back into subsequent prices, dispatch or allocations.
Hybrid supervisory
Market coordination operates alongside supervisory control, deterministic limits or fail-safe modes.
Coordination topology
Select oneShould coordination be centralised, distributed or holarchical?
Defines where coordination decisions are made and how local and system-wide objectives interact.
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Coordination topology
Select oneShould coordination be centralised, distributed or holarchical?
Defines where coordination decisions are made and how local and system-wide objectives interact.
Design options
3 optionsCentralised
A central operator or market engine forms system-wide schedules, dispatch or prices.
Distributed
Local agents coordinate using common protocols, constraints and signals.
Holarchical
Nested local coordination processes interact across multiple physical network levels.
Dispatch and optimisation architecture
Select oneHow should the feasible operating point be determined?
Distinguishes system-wide optimisation from sequential matching and locally autonomous optimisation.
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Dispatch and optimisation architecture
Select oneHow should the feasible operating point be determined?
Distinguishes system-wide optimisation from sequential matching and locally autonomous optimisation.
Design options
4 optionsCentral system optimisation
A central optimisation jointly determines a feasible system-wide operating point.
Sequential market matching
Requests are matched incrementally against the currently available system state.
Local optimisation within coordinated boundaries
Participants optimise locally within network or market boundaries communicated by coordinating layers.
Hybrid
Central and local optimisation processes coexist and coordinate.
Design category
Prices and products
Price formation
Select oneHow should the price of electricity be formed?
Identifies the principal rule used to translate costs, scarcity and system conditions into prices.
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Price formation
Select oneHow should the price of electricity be formed?
Identifies the principal rule used to translate costs, scarcity and system conditions into prices.
Design options
4 optionsMarginal pricing
Cleared energy is priced using a marginal accepted offer, marginal cost or optimisation-derived marginal value.
Pay as bid
Participants receive or pay their submitted price.
Average or cost-based pricing
Prices are formed from average, regulated or explicitly cost-reflective components.
Stateful dynamic pricing
Prices update from current demand, supply, network state and retained system state.
Energy and network signals
Select oneHow should energy value and network conditions be communicated?
Determines whether energy and network conditions are handled separately, through operating limits, or through a unified coordination signal.
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Energy and network signals
Select oneHow should energy value and network conditions be communicated?
Determines whether energy and network conditions are handled separately, through operating limits, or through a unified coordination signal.
Design options
4 optionsEnergy price; network handled separately
The principal market price reflects energy while network constraints are handled through other operational mechanisms.
Separate energy and network prices
Distinct economic signals represent energy and network conditions.
Energy price + network operating envelope
Energy retains its own price while the network communicates a time-varying feasible import or export region.
Unified energy and network price
A single coordination price reflects both energy availability and network scarcity.
Wholesale price geography
Select oneAt what spatial resolution should participants face the wholesale energy price?
Separates the geographic resolution of settlement prices from the level of network detail used internally for dispatch.
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Wholesale price geography
Select oneAt what spatial resolution should participants face the wholesale energy price?
Separates the geographic resolution of settlement prices from the level of network detail used internally for dispatch.
Design options
4 optionsNational
A broad national market area shares a common principal wholesale price.
Zonal or regional
Different geographic market regions can settle at different wholesale prices.
Nodal
Wholesale prices are differentiated at individual transmission locations.
Network-hierarchical
Price resolution follows the physical network hierarchy and the location at which scarcity arises.
Design category
Participation
Participant granularity
Select one or moreAt what level should resources be able to participate?
Determines whether participation is limited to established wholesale actors or extends directly to consumers, devices and software agents.
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Participant granularity
Select one or moreAt what level should resources be able to participate?
Determines whether participation is limited to established wholesale actors or extends directly to consumers, devices and software agents.
Design options
4 optionsLarge generators and suppliers
Participation is concentrated among established wholesale actors.
Aggregators
Smaller resources participate through portfolio intermediaries.
Households and businesses
End users can express preferences, requirements or service needs directly.
Devices and software agents
Individual flexible assets can submit or respond to machine-readable requests and signals.
Design category
Network and physics
Network representation
Select oneHow explicitly should the physical network be represented in market clearing?
Defines whether the market abstracts away network constraints or represents progressively finer physical structure.
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Network representation
Select oneHow explicitly should the physical network be represented in market clearing?
Defines whether the market abstracts away network constraints or represents progressively finer physical structure.
Design options
4 optionsCopper plate
The system is treated as unconstrained within a broad market area for principal market-clearing purposes.
Zonal
The network is represented through a limited number of geographic zones.
Nodal
Transmission nodes and constraints are represented directly in market clearing.
Multi-level or holarchical
Transmission, distribution and local levels are represented through nested coordination.
Distribution-network treatment
Select oneHow should distribution-network constraints be incorporated?
Determines whether local constraints sit outside the market, are procured through flexibility, imposed as operating limits or integrated directly.
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Distribution-network treatment
Select oneHow should distribution-network constraints be incorporated?
Determines whether local constraints sit outside the market, are procured through flexibility, imposed as operating limits or integrated directly.
Design options
4 optionsNot represented
Distribution constraints sit outside the principal market model.
Local flexibility procurement
The network operator procures changes in generation or consumption to manage local constraints.
External operating envelopes
A network operator communicates time-varying import or export limits that market participants must respect.
Integrated network feasibility
Distribution-network state and constraints are included directly in allocation and coordination.
Congestion management
Select oneWhat should happen when the unconstrained market outcome conflicts with transmission limits?
Distinguishes ex-post redispatch, zonal congestion management, nodal pricing and network-hierarchical coordination.
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Congestion management
Select oneWhat should happen when the unconstrained market outcome conflicts with transmission limits?
Distinguishes ex-post redispatch, zonal congestion management, nodal pricing and network-hierarchical coordination.
Design options
5 optionsRedispatch outside the main energy price
The principal market clears at a coarser level and the system operator subsequently adjusts resources to resolve constraints.
Zonal separation + residual redispatch
Inter-zonal congestion can separate market prices while residual intra-zonal congestion is managed operationally.
Central constrained dispatch + regional settlement
Transmission constraints influence central physical dispatch while settlement prices remain geographically coarser than the network model.
Congestion embedded in nodal dispatch and prices
Transmission constraints directly affect nodal dispatch and locational marginal prices.
Network-hierarchical coordination
Constraints influence allocation and price at the physical network level where scarcity occurs.
Design category
Reliability and scarcity
Scarcity allocation
Select oneWhen there is not enough energy or network capacity, how should access be allocated?
Defines the rationing or optimisation rule used when not every feasible request can be served.
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Scarcity allocation
Select oneWhen there is not enough energy or network capacity, how should access be allocated?
Defines the rationing or optimisation rule used when not every feasible request can be served.
Design options
5 optionsHighest willingness to pay
Scarce capacity is preferentially allocated to the highest-valued bids or requests.
Optimisation-based allocation
A central optimisation determines the preferred feasible allocation subject to bids, costs and system constraints.
First come, first served
Earlier requests receive priority until available capacity is exhausted.
Administrative priority
Preset categories or policy rules determine which loads or resources receive priority.
Fairness-aware allocation
Service levels and historical disadvantage explicitly influence allocation.
Balancing architecture
Select oneHow should deviations between expected and actual system conditions be corrected?
Distinguishes a separate balancing mechanism, repeated central redispatch and continuous market feedback.
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Balancing architecture
Select oneHow should deviations between expected and actual system conditions be corrected?
Distinguishes a separate balancing mechanism, repeated central redispatch and continuous market feedback.
Design options
3 optionsSeparate balancing mechanism
A distinct near-real-time mechanism corrects deviations from prior wholesale-market positions.
Repeated central redispatch
A central dispatch engine repeatedly recalculates operating targets as conditions change.
Continuous market feedback
Observed state and new requests continuously affect subsequent prices and allocations within the market itself.
Design category
Fairness
Fairness memory
Select oneShould past service outcomes affect future allocation?
Determines whether repeated disadvantage is ignored or corrected through retained state.
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Fairness memory
Select oneShould past service outcomes affect future allocation?
Determines whether repeated disadvantage is ignored or corrected through retained state.
Design options
3 optionsMemoryless
Each interval is allocated without explicit reference to previous service outcomes.
Bounded shortage memory
Recent unmet service affects future priority within defined bounds.
Long-term entitlement accounting
Cumulative service, access or entitlement balances are tracked over longer periods.
Basis of equal treatment
Select one or moreWhat should determine when market participants are treated equivalently?
Makes explicit the underlying concept of fairness used when comparing participants.
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Basis of equal treatment
Select one or moreWhat should determine when market participants are treated equivalently?
Makes explicit the underlying concept of fairness used when comparing participants.
Design options
5 optionsSame bid or economic value
Participants expressing equivalent economic willingness to buy or sell are treated equivalently.
Same market location
Participants at the same relevant market location face the same locational signal.
Same service or contractual class
Participants purchasing or providing equivalent defined services receive equivalent treatment.
Same contribution to system value
Equivalent contributions to system reliability, location or capability justify equivalent remuneration.
Stateful fairness position
Treatment can differ when required to compensate for differences in previous service outcomes.
Design category
Investment
Non-fuel cost recovery
Select one or moreHow should generators recover capital and non-fuel operating costs?
Separates recovery of fixed system costs from short-run fuel and dispatch costs.
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Non-fuel cost recovery
Select one or moreHow should generators recover capital and non-fuel operating costs?
Separates recovery of fixed system costs from short-run fuel and dispatch costs.
Design options
4 optionsEnergy-price rents
Fixed costs are recovered through margins earned in energy markets.
Capacity payments
Resources receive payment for accredited capacity or availability.
Long-term contracts
Revenue is stabilised or underwritten through long-term contracts.
System-value payments
Payments reflect contribution to reliability, location and wider system need.
Capacity adequacy
Select one or moreHow should the system ensure sufficient capacity exists during periods of system stress?
Distinguishes scarcity-based investment incentives from explicit capacity procurement, strategic reserves and system-value approaches.
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Capacity adequacy
Select one or moreHow should the system ensure sufficient capacity exists during periods of system stress?
Distinguishes scarcity-based investment incentives from explicit capacity procurement, strategic reserves and system-value approaches.
Design options
5 optionsEnergy and scarcity revenues
Expected revenues during normal and scarce periods provide the principal investment signal for adequate capacity.
Capacity market
Resources receive explicit payments for accredited capacity or availability.
Strategic or reliability reserve
Selected resources are procured specifically to protect system adequacy or reliability.
Long-term procurement
Governments, system operators or other bodies contract directly for required future capacity.
System-value remuneration
Capacity remuneration reflects each resource’s measured contribution to system adequacy and wider system value.
See how solutions navigate the design space
Candidate solutions combine these individual choices into complete market architectures. Continue to the Solutions tab to review the proposals currently being assessed.
View candidate solutions