Electricity Market Policies

Energy is once again dominating headlines all over the world. Gas and oil prices are volatile, key shipping routes face geopolitical pressure, and policymakers are concerned about supply risks. The renewed uncertainty is a reminder of an uncomfortable reality: the next energy crisis isn’t an if – it’s a when, and a question of how prepared we are. A defining challenge of this decade, and one that now feels more urgent than ever, is how to build a resilient energy system. One that minimises structural dependencies and is designed for rising electricity demand. The imperative of our time: The more we electrify, the less we import fossil fuels. The less we import, the more resilient we become. The course of action is clear: ▪️ Relentlessly scale renewables: Slowing the buildout will not reduce costs. Quite the opposite – delay compounds system costs for the entire economy. ▪️ Fix the grids: As fast as possible, as efficiently as possible, and at the lowest possible cost. Before they become even more of a bottleneck. ▪️ Secure 24/7 electricity supply: When the wind isn’t blowing and the sun isn’t shining, renewables need reliable backup in the form of battery storage and hydrogen-ready gas fired power plants. But gas should serve only as a backup, with renewables and batteries reducing its utilisation. ▪️ Reduce gas supply dependence with infrastructure and diversification: We must not replace old dependencies with new ones. Diversification of gas supplies is key. And the physical prerequisite is an import infrastructure with buffers. We need the planned LNG terminals, complemented by a nationally held gas reserve to help ensure secure supply in winter. ▪️ Electrify everything that makes sense: The more we can power with mostly homegrown electrons, the less dependent we become on fossil imports. Other energy import-dependent countries like Japan and China have electrification rates that are around 10 percentage points higher than Germany’s. This shows where the path forward lies. Electrification reduces reliance on imported fossil fuels, which in turn strengthens overall resilience. The time to act is now.

𝐖𝐡𝐚𝐭 𝐀𝐫𝐞 𝐓𝐢𝐦𝐞-𝐨𝐟-𝐃𝐚𝐲 (𝐓𝐨𝐃) 𝐓𝐚𝐫𝐢𝐟𝐟𝐬 𝐀𝐧𝐝 𝐖𝐡𝐲 𝐓𝐡𝐞𝐲 𝐌𝐚𝐭𝐭𝐞𝐫 𝐟𝐨𝐫 𝐈𝐧𝐝𝐢𝐚’𝐬 𝐄𝐧𝐞𝐫𝐠𝐲 𝐅𝐮𝐭𝐮𝐫𝐞 ? ⚡ India is embracing Time-of-Day (ToD) tariffs, a game-changing pricing model where electricity rates vary based on when power is consumed. This approach helps align demand with generation, especially from renewables like solar and wind. 𝐖𝐡𝐚𝐭’𝐬 𝐢𝐧 𝐢𝐭 𝐟𝐨𝐫 𝐜𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬 ? ✅ Lower bills by shifting usage to off-peak hours ✅ Flexibility to manage consumption with smart meters ✅ Smarter energy decisions ✅ Support for clean energy by using power during solar hours 𝐖𝐡𝐲 𝐢𝐭’𝐬 𝐚 𝐰𝐢𝐧 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐠𝐫𝐢𝐝:  📉 Flatten peak demand 💰 Reduce costly infrastructure upgrades 🌞 Integrate more solar/wind efficiently ⚙️ Lower DISCOM power procurement costs 𝐄𝐧𝐚𝐛𝐥𝐢𝐧𝐠 𝐭𝐡𝐢𝐬 𝐬𝐡𝐢𝐟𝐭:  🔸 Consumer Rights (Electricity Rights of Consumers, 2020) 🔸 Electricity (Right of Consumer) (Amendment) Rules, 2023 🔸 Grid Interactive Rooftop Generating Systems Regulations, 2019 🔸 MSEDCL’s Proposals for revised time slots 🔸 Regulatory push from State Electricity Regulatory Commissions (SERCs) Government of Maharashtra (GoM), Maharashtra Electricity Regulatory Commission's (MERC) 5th Multi-Year Tariff MYT (FY 2025–30), revised ToD slabs are now more reflective of real demand patterns: • Solar Hours: 9 AM – 5 PM ☀️ • Peak Hours: Extended from 5 PM – 12 AM 🚨 • Night Slab: Reduced from 8 to 6 hours 🌙 𝐅𝐨𝐫 𝐂&𝐈 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬 : By adjusting operations to off-peak periods, businesses can unlock major savings and improve their sustainability footprint. 🏭 𝐇𝐨𝐰 𝐓𝐨𝐃 𝐓𝐚𝐫𝐢𝐟𝐟𝐬 𝐃𝐫𝐢𝐯𝐞 𝐁𝐚𝐭𝐭𝐞𝐫𝐲 𝐄𝐧𝐞𝐫𝐠𝐲 𝐒𝐭𝐨𝐫𝐚𝐠𝐞 (𝐁𝐄𝐒𝐒) 𝐀𝐝𝐨𝐩𝐭𝐢𝐨𝐧: 🔋 💸 Energy arbitrage: Buy low, sell high 🔌 Peak load support: Discharge when needed 🌞 Renewable synergy: Store solar & wind energy for later use 🏢 Business savings through smart load management ⚡ DISCOMs reduce peak procurement costs 🔄 Flexibility for demand response ToD tariffs aren’t just a pricing tool, they’re a catalyst for India’s smart, sustainable energy future. As the country advances toward a more decentralized, digitized, and renewable-powered grid, the strategic deployment of Battery Energy Storage Systems (BESS), enabled by well-designed ToD tariffs, will be instrumental. With the scaling of smart metering, supportive regulatory frameworks, and growing consumer awareness, this powerful synergy will form the backbone of India’s evolving energy ecosystem and serve as a cornerstone of its clean energy transition. 🚀 Let's focus on smarter energy storage, wiser usage, and integrating renewable sources to create a sustainable future !!! 🌳 #renewableenergy #sustainability #energytransition #cleanenergy #business

Most large-scale energy initiatives follow the same pattern: start with big commitments, roll out connections, figure out the policy later. Nigeria did the opposite. And that’s why it’s working. Instead of treating private investment as an afterthought, Nigeria built the policy framework first. And that made all the difference. What Nigeria Got Right - 1. A Structured Energy Compact – Nigeria created a clear, integrated policy that combines grid expansion, mini-grids, and decentralized solutions into a single plan. Other countries still treat off-grid power as an afterthought. 2. Private Sector Was Built Into the Model – Most African energy plans rely almost entirely on government spending. Nigeria understood that public money alone won’t be enough, so they de-risked the investment landscape for private players. 3. Policy Stability That Investors Can Trust – The biggest deterrent to energy investment is regulatory unpredictability. Nigeria structured clear rules around licensing, tariffs, and long-term market participation, giving businesses and investors the ability to plan long-term—not just react to political cycles. The Results Speak for Themselves - - Nigeria is now the leading mini-grid market in Africa. - Private capital is flowing into the energy sector at scale. - The policy model is structured for real expansion—not just short-term funding cycles. Now compare this to many other Mission 300 countries - - There’s no clear strategy to integrate decentralized and centralized power. - Investment risk is still too high for private capital to flow at scale. - The policy landscape remains too unstable for long-term planning. Nigeria isn’t perfect. But it’s one of the few places where energy policy is being built for growth, not just for the next round of funding. If Mission 300 countries want to make real progress, this is the playbook - - Stable, investment-friendly regulation - A clear plan that integrates all forms of power - Long-term market structures that attract capital at scale Energy access is an industry, not a one-time intervention. And Nigeria is proving that when the policy is right, the investment follows. #NigeriaEnergy #Mission300 #SmartInvestment #EnergyForGrowth

How is Germany's #Energiewende going, and how should it proceed? In our brand-new piece in Communications Earth & Environment, we show that the expansion of variable renewables has progressed substantially in recent years, but electrification and flexibility have not kept pace. We argue that German policy makers should stick to ambitious targets that will make solar and wind power the backbone of Germany’s energy future, capitalizing on recently much-improved conditions. Equally important, they should also provide firm guidance and support for heat pumps and electric cars, as opposed to hoping for alternative solutions such as e-fuels. We identify several challenges that need to be addressed in order to integrate wind and solar more efficiently and enhance resilience: ▶️ More efficient system integration of rooftop PV by aligning self-consumption incentives with system needs ▶️ Make consumption more flexible, which involves price signals, smart meters and storage ▶️ Efficiently expand transmission and distribution grids ▶️ Ensure security of supply without discriminating against flexibility technologies ▶️ Make the energy system weather resilient, which also includes long-duration storage We conclude that Germany should not slow down, but rather accelerate its energy transition to put the country on the right track towards a low-carbon future and to reap related environmental and economic benefits. Our key policy conclusions are: 1️⃣ Variable renewables are the backbone 2️⃣ Electrification requires technology clarity, not technology neutrality How does this align with current Germany energy policy? Well, the current German government seems to follow a different narrative. Instead of pushing for sustained high growth of wind and solar, there are now plans to slow down renewable expansion, hinting to the fact that electricity demand is not growing as expected. This, however, is a consequence of electrification lagging behind, which only means that less fossil fuel is substituted in the transport and heating sectors. What is worse, the notion of "technology openness" is back in the German energy policy space. Instead of putting proven and low-cost direct electrification options such as battery-electric vehicles and heat pumps in the center of the transition, there is now a lot of talk about hydrogen and e-fuels, again. In my view, this will not make the Energiewende more "pragmatic" and "realistic" as policy makers now claim - it would rather keep us from going for the lowest-cost options we have. And, as others have noted, renewables and electrification are not a German "Sonderweg", but rather an emerging global mega trend. Compare, for example, recent work by Kingsmill Bond, Michael Liebreich and many others. Our commentary and its graphs are based on constantly updated data gathered by Adeline Guéret, Alexander Roth, Felix Schmidt and me on the Open Energy Tracker, developed in the Kopernikus-Projekt Ariadne. Feedback welcome!

"One of the key ways to make energy systems more reliable is by maximizing flexibility — improving how well the system can adapt in real time to changes in supply and demand. The more flexible the system, the better it can handle sudden demand spikes in the event of extreme weather, such as cold snaps or heat waves, or respond to supply disruptions such as plant outages. Improving flexibility includes upgrading aging infrastructure. Much of the U.S. grid was built decades ago under different demand patterns. Modernizing the grid — by updating substations and transmission equipment, deploying advanced sensors and incorporating advanced transmission technologies (ATTs), for example — can reduce failure rates during extreme heat and cold. These technologies help operators detect problems quicker, reroute power if equipment is damaged and restore service fast. Modernization not only improves reliability but also reduces expensive emergency interventions and lowers long-term maintenance costs. Increasing grid capacity, both through deployment of ATTs and building regional and interregional transmission lines, can reduce the risk of a local weather event turning into a widespread outage. Creating a more interconnected grid allows regions to share power during shortages. Having this greater transmission capacity also help keep prices down by allowing lower-cost electricity to reach areas facing higher demand. Demand-side management options can help ease pressure on the system during extreme weather events. These include encouraging customers and large users to reduce or shift electricity use during peak periods in exchange for lower bills or leveraging distributed energy resources to help prevent shortages. Systems that rely too much on a single fuel are more vulnerable to disruption. Diversification across energy sources and technologies helps reduce the risk of issues related to fuel shortages, infrastructure failures and localized weather impacts. Finally, policy is also critical. It’s vital that incentives are properly aligned with modern needs for flexibility and preparedness. This can help utilities make system investments that really work in extreme weather and minimize costs to consumers in both the short and the long run." Kelly Lefler World Resources Institute https://lnkd.in/e5syqXQp

Snippet: Australia’s Renewable Energy Challenge: Curtailment and Opportunity Australia is rapidly shifting to renewable energy, but curtailment - spilling wind and solar power due to grid limitations - remains a challenge. In his article [1], Daniel Mercer of ABC News examines this issue and its implications for our energy future Key Takeaways: 1. Grid Infrastructure and Curtailment: Australia’s renewable energy grid is expanding rapidly, but without sufficient infrastructure upgrades, a significant portion of this clean energy is being wasted. Investing in modernisation could reduce curtailment and unlock the full potential of renewables. 2. Coal Plants as a Barrier: Coal plants, due to their inflexible design, continue to limit renewable energy integration. As these plants retire, renewables will have more room to grow, though careful management is needed to ensure a stable transition. 3. Rooftop PV’s Role in Curtailment: While coal plants' minimum operational levels limit the grid's capacity for renewables, rooftop solar PV increases curtailment by reducing operational demand during peak generation. This growing impact underscores the need for better grid management and energy storage solutions. 4. Energy Storage as a Key Solution: Storage solutions like large-scale to EV's and household batteries are essential to shifting surplus renewable energy to periods of high demand. This will improve renewable efficiency and help balance energy supply. 5. Economic Opportunities for Consumers: Curtailment presents opportunities for consumers to save on energy costs by adjusting their usage. Flexible consumption models could support grid stability and maximise economic benefits. 6. Market Reform for Renewable Growth: Australia’s energy market needs to adapt to the variability of renewables. Strategic market reforms could stabilise pricing, support renewable integration, incentivise the adoption of storage technologies and flexible loads. 7. System Design Challenges in Decarbonisation: Curtailment reveals the need for smarter grid management as Australia moves towards decarbonisation. Addressing these system design challenges could accelerate the country’s transition to a low-carbon future. 8. Aligning Climate Goals with Energy Efficiency: Reducing renewable energy waste through curtailment aligns directly with Australia’s long-term climate goals. Prioritising storage and grid improvements will strengthen the country’s sustainability efforts.    Curtailment poses challenges but also opportunities for Australia’s renewable sector. With investment in infrastructure, storage, market reforms, and flexible loads, the nation can better harness its renewable potential and meet its climate goals. References: 1. Australia 'wasting' record amounts of renewable energy as share of wind and solar soars by Daniel Mercer (Sat 06 Sep 2024) .. https://lnkd.in/g8-DmV-X

My biggest wish for 2025 is for Energinet to introduce cost-reflective time-of-use tariffs.   Last year, Energinet announced a significant price increase that came into force on January 1st, but that is not the main problem with its tariffs. The main problem is that it enforces a flat tariff regime at all hours during low, high, and peak load periods.   Sending a MWh through the system is incredibly expensive during a few hours of the year because it is the last drop in an already congested system. In most hours, however, it is incredibly cheap to transport a MWh because the power is in the opposite direction of the main flow or just at a low load hour and, therefore, does not contribute to a need for grid reinforcements.   The European regulation requires that grid tariffs are transparent, non-discriminating, and cost-reflective.   To meet the requirements for cost-reflective tariffs, all the local grid companies in Denmark have introduced time-of-use tariffs that are higher during peak hours and correspondingly lower during low-load hours.   When optimizing BESS operation, time-of-use tariffs are great because they give a relevant price signal for supporting the grid and make it possible to charge at lower tariffs than a flat tariff regime.   Energinet's flat tariff system results in collecting a disproportionately high percentage of overall tariffs, as grid companies reduce their tariffs during low-load hours. This percentage exceeds 70% for all customer categories except for private households and reaches 87% for utility-scale projects.   The overall cost of Energinet tariffs would not be a problem for storage in Denmark if it were cost-reflective and thus mainly distributed to the hours when there is a high cost of using the grid.   Hybrid Greentech - Energy Storage Intelligence

I was honored to join Axios energy reporter Ben Geman at the Atlantic Council in Washington, DC, for a fireside chat to discuss what it will take to power an economy that’s more electrified, resilient and competitive. The reality is stark: demand for electricity is projected to grow far faster than overall energy use. This is no threat to prosperity; it’s an opportunity - if we act with realism and speed. I have three takeaways from our discussion, and they are based on one simple insight: a successful energy transition needs energy security. We need to put the technologies and infrastructure in place to ensure we have the right energy, at the right time, at the right price. We can achieve this if we: 1. Squeeze more from every kilowatt: Energy efficiency and grid modernization are just as important as energy supply. We can quickly improve energy efficiency in industries and buildings by using high-efficiency motors with variable-speed drives. If widely adopted, this could reduce electricity demand by about 10% - the same as the output from around 100 coal plants or 35 nuclear plants. These savings could meet the growing energy needs of data centers for several years. 2. Modernize and digitalize the grid: We are still trying to run a 21st century economy on 20th century infrastructure. By 2040, the world needs 80 million kilometers (almost 50 million miles) of grid upgrades, plus storage and digital control, to integrate variable renewables, balance peaks, and improve resilience. Permitting is now a critical bottleneck. This is where targeted policy – with smarter approvals, clear standards, and investment in distribution networks – can unlock real capacity quickly. 3. Make AI part of the solution: There are a lot of headlines that Artificial Intelligence is driving up demand for energy. However, AI-enabled energy management – with digital substations and edge control – can also optimize usage, reduce losses and prevent outages. We have to see AI as a crucial tool to manage grids, to forecast, shift and reduce demand. AI can help us align demand growth with grid reliability. None of this scales without people. Resilient energy systems need a skilled workforce, from electricians to data scientists. Upskilling, retraining, and apprenticeships have to be made a priority by both the public and the private sector. The path forward is clear: electrify everything you can; deploy efficiency first; digitalize the grid; and use AI to manage what we add (and have). For regions and countries that do this, energy security will be a competitive advantage creating the foundations for sustainable growth. Listen to the full discussion here: https://lnkd.in/emMu-4zr

Back to the grid…. Most people who use electricity don’t fully appreciate where it comes from or how the cost is calculated for them as a consumer. Energy spot price auctions are a mechanism used in electricity markets to price electricity according to real-time, market based supply and demand conditions at a particular moment. The goal of spot price auctions is to create a competitive market for electricity and facilitate efficient allocation of resources. However, the volatility in spot prices has created significant challenges for all stakeholders. The symptoms include price volatility and instability in electricity markets. To enhance grid reliability and stability, alternative approaches must be considered. While spot pricing may seem like a straightforward way to determine prices, it fails to account for the unique dynamics of the power grid and the long-term investments required to maintain a reliable and resilient energy ecosystem. The primary issue with spot price auctions is that they treat electricity as a commodity, subject to the whims of the market. Dramatic price fluctuations have severe consequences for both consumers and energy providers. When prices spike during periods of high demand or supply disruptions, it imposes enormous financial burdens on households and businesses, threatening economic stability. From the perspective of energy suppliers, the unpredictability of spot prices makes it challenging to plan for long-term capital investments in new generation capacity, transmission infrastructure, and grid modernization. These investments are crucial for ensuring the continued reliability and sustainability of the power grid, but they require a level of price certainty that spot markets simply cannot provide. It is time for policymakers and industry leaders to explore alternative pricing mechanisms that prioritize stability and long-term planning. One alternative is the use of capacity markets, where energy providers are compensated not only for the #electricity they generate but also for the availability of their generation assets. This model would provide a more reliable revenue stream for suppliers, enabling them to make the necessary investments in the grid's future. Another alternative is the implementation of forward contracts and hedging strategies. By locking in prices for electricity over longer time horizons, these mechanisms can help smooth out price volatility and provide the predictability that energy providers and consumers require. Transitioning to a more resilient energy system will not be easy, but it is a necessary step to ensure the long-term prosperity and security of our communities. By moving beyond the limitations of #energy spot price auctions, we can build a power grid that is truly fit for the future. The #grid of the future should reward a diverse portfolio of generation sources. It is time to move past demonizing reasonable energy sources even if they don’t fit certain ideologies.

A Call for Energy Justice in Domestic Electricity Tariffs — Towards Equitable, Efficient, and Environmentally Aligned Pricing In our journey toward Amrit Kaal, India’s energy landscape must reflect the principles of equity, sustainability, and responsible consumption. Electricity is no longer a mere utility. It is a fundamental enabler of well-being, productivity, and climate resilience. Yet, our current tariff structure doesn’t fully reflect this evolution. Today, a modest middle-class household — with a single AC and a few appliances — crosses 500 units and is charged the highest slab. Meanwhile, ultra-high consumption homes — with multiple ACs, EV chargers, heated pools — consuming 5000+ units monthly, continue to pay the same rate per unit. This is not a question of affordability. It is a question of justice. India has shown the way before: income tax is progressive, LPG subsidies were rightly withdrawn from high-income users, and energy transition is being led with resolve. It’s time now to apply the same principle to domestic electricity tariffs — with compassion, clarity, and commitment. Proposed: Super-Premium Slabs for Ultra-High Domestic Consumption • 1001–2500 units/month – ₹25/unit • 2501–5000 units/month – ₹35/unit • 5000+ units/month – ₹50/unit This is not about penalizing success. It is about ensuring that consumption beyond basic needs carries a reflective signal — fiscal, environmental, and moral. I’ve developed a concise 2-page roadmap with international best practices (CARE Program – California, Korea’s block pricing), data-backed rationale, and a phased implementation strategy that protects middle-class aspirations while nudging responsible behavior at the top. Let’s lead this conversation with vision, not blame. With data, not dogma. With fairness, not fear. I invite policymakers, regulators, and thought leaders to join in shaping a tariff structure that is aligned with Viksit Bharat@2047. #EnergyJustice #ElectricityTariffReform #ResponsibleConsumption #GreenTransition #SustainableIndia #EquityInEnergy #MoP #MERC #ClimateLeadership