OIES – The Complex Challenge of Coordination in Liberalised and Carbon-Constrained Energy Systems
The document examines the complex challenges of coordination in liberalised and carbon-constrained energy systems.
Liberalisation and decarbonisation have transformed the coordination of energy systems from an internal engineering task into a complex economic and digital problem. Liberalisation has led to fragmentation of interactions among various energy market participants, revealing information asymmetry and externalities of congestion. Decarbonisation adds a new layer of complexity, requiring the integration of renewable energy sources, electrification of heat and transport, and the interaction of electricity with hydrogen, gas, and heat networks. The main challenge of the energy transition is coordination in complexity, where frictions arise due to information shortages, misaligned incentives, incompatible timelines, and standards.
