The Helm Review has recommended that the government should adopt a system of auctions for “equivalent firm capacity” to support investment in electricity generation capacity. In a first-best policy world, this would be supplemented by an economy-wide carbon tax; in the second-best version, the auction would have to function under a constraint on carbon emissions from the electricity sector. The review also points out that there will be many hours in which the marginal cost of electricity is effectively zero, if wind, solar and nuclear power are capable of meeting the entire demand. The presentation will cover modelling results showing what this market might look like in practice. While this modelling will focus on one chapter of the review, discussion during the seminar might well range more widely.
Richard Green, Professor of Sustainable Energy Business at Imperial College Business School, has been studying the economics and regulation of the electricity industry for over 25 years. He has written extensively on market power in wholesale electricity markets and has also worked on transmission pricing. More recently, the main focus of his work has been on the impact of low-carbon generation (nuclear and renewables) and energy storage on the electricity market, and the business and policy implications of this. He was the chair of the BIEE in 2016.