Abstract

This article explores the question of the choice of market design rules for hybrid offshore wind project (hybrid) under EU law. Hybrids refer to a project set-up that combines electricity production from offshore wind farms with electricity trade through interconnector(s) between bidding areas located in several countries. Given that there is only one power system, even if some parts of it are situated offshore and others onshore, the article makes the preliminary assumption that the same market design rules should apply to the entire European power system to maintain a level playing field and ensure market functions, i.e. both onshore and offshore. Based on this assumption, the article reviews the key requirements related to market design as defined in EU law and assesses the implications of their applicability to hybrid offshore wind projects. The following six building blocks of electricity market design regulation are identified: grid planning; grid ownership and unbundling rules; grid operatorship and associated responsibilities (e.g. market dispatch, balancing responsibility); access to the grid regime, including connection rules; cross-border trading and congestion management; and regulatory oversight. The article argues that the selection of market design rules is the basis for the allocation of costs and benefits, enabling the projects to be financially viable for all parties involved. While some temporary adjusting financing mechanisms may be necessary, these will all be based on the chosen market design model. 

This paper was prepared for the OGEL Special Issue on "Electricity Market Design". More information here www.ogel.org/news.asp?key=775