Institutional challenges caused by the integration of renewable energy sources in the European electricity sector

The integration of large amounts of variable renewable energy poses fundamental challenges to the operation and governance of the energy system. In this article we address the main institutional challenges that are caused by the integration of variable renewable energy sources like solar and wind energy in the European power system. We first address how the variable and unpredictable nature of wind and solar energy increases the demand for flexible resources and we discuss potential sources of flexibility. Next, we elaborate on how the need for more flexibility challenges the prevailing market design of todays liberalized power systems. Furthermore, we discuss the key areas where there is a need for a more integrated approach to research and policy making. The need for a more integrated approach is motivated by exposing a number of critical interdependencies between technical and institutional sub-systems.