To an optimal electricity supply system. Possible bottlenecks in the development to an optimal electricity supply system in northwest Europe

It is uncertain how the electricity system in Europe, and in particular northwest Europe and the Netherlands, will develop in the next fifteen years. The main objective of this report is to identify possible bottlenecks that may hamper the northwest European electricity system to develop into an optimal system in the long term (until 2020). Subsequently, based on the identified bottlenecks, the report attempts to indicate relevant market response and policy options. To be able to identify possible bottlenecks in the development to an optimal electricity system, an analytical framework has been set up with the aim to identify possible (future) problems in a structured way. The segments generation, network, demand, balancing, and policy and regulation are analysed, as well as the interactions between these segments. Each identified bottleneck is assessed on the criteria reliability, sustainability and affordability. Three bottlenecks are analysed in more detail: (1) The increasing penetration of distributed generation (DG) and its interaction with the electricity network. Dutch policy could be aimed at: (a) Gaining more insight in the costs and benefits that result from the increasing penetration of DG; (b) Creating possibilities for DSOs to experiment with innovative (network management) concepts; (c) Introducing locational signals; and (d) Further analyse the possibility of ownership unbundling; (2) The problem of intermittency and its implications for balancing the electricity system. Dutch policy could be aimed at: (a) Creating the environment in which the market is able to respond in an efficient way; (b) Monitoring market responses; (c) Market coupling; and (d) Discussing the timing of the gate closure; and (3) Interconnection and congestion issues in combination with generation. Dutch policy could be aimed at: (a) Using the existing interconnection capacity as efficient as possible; (b) Identifying the causes behind price differences; and (c) Harmonise market rules