The Centre for Net Zero Market Design
The UCL Centre for Net Zero Market Design researches policy and market reforms for a low-carbon UK electricity system, focusing on surplus energy, investment, and global energy transitions.
Our mission
The UCL Centre for Net Zero Market Design will provide independent, evidence-based analysis to inform policies for a rapidly decarbonising UK energy system, with stakeholder engagement to support delivery of an investible market and efficient operation for business and consumers.
The challenge
Decarbonising electricity is the cornerstone of broader transition of the global energy economy, and radical innovation is driving fundamental changes in how we generate, transport and use electricity. The design of electricity markets is crucial to ensure adequate investment and efficient operation of the emerging systems. Success can deliver decarbonised electricity that reliably meets the needs of consumers at affordable prices; failure would lead to the opposite.
Faced with these challenges and building upon our earlier stakeholder-engaged research we've established a new Centre for Net Zero Market Design, shaped in consultation with industry and other stakeholders.
Our focus
- Provide independent research input to the wide-ranging policy and regulatory reforms that are required to decarbonise the UK electricity system within a decade.
- Specifically, work with the ongoing UK Review of Electricity Market Arrangements (REMA) and related initiatives under the new government.
- Contribute academic insights including from international experience, and relate UK options to developments in European electricity markets
- Through our Masters programmes, help to train a new generation of electricity market expertise fit for the global transition
Core projects
Until recently, the primary concern for electricity market reform has been ensuring sufficient investment in renewable energy generation technologies across GB. As we accelerate towards ambitious targets for installed renewable capacity, new challenges are arising. In our second REMA consultation response, we conducted preliminary analysis approximating the volume of electricity generation that could surpass demand in 2030. Our results indicate that a core focus for this new era of market reform should centre around the economics of the likely surplus of electricity generation from renewables at times of high output.
The first project of the Centre will build on our preliminary analysis. We will quantify and characterise potential surplus output in 2030 and 2040, under various supply and demand scenarios, and will explore the relationship between the projected surplus and electricity prices (surplus of GB generation over demand at any given time may or may not lead to negative wholesale prices, depending upon multiple other factors). We will use this analysis to evaluate the implications for investment in new generation, the requirements for system wide storage and flexibility, and the impact on domestic and industrial consumers. Finally, we explore the policy options available to support the most efficient development of the GB electricity system given the challenges and opportunities arising from surplus generation.
Associated projects
During 2024, Centre staff are also engaged in several ongoing associated projects:
A project shared by UCL’s Climate Finance team and the Energy Systems Modelling team at the University of Strathclyde to investigate the most effective way of incentivising the investment required to meet the government’s offshore wind target, while rewarding the flexibility to match supply and demand. Funded by UK Research and Innovation, Energy Programme. Contact: r.gross@ukerc.ac.uk
Integration, consistency and strategy. Exploring the consistency of announced goals, vis-à-vis actual trends in energy investments in gas and electricity, and UK-EU energy relationships including the terms of electricity trade and investment in multi-purpose interconnectors and potential role of UK vs EU carbon pricing and border mechanisms. Funded by Institute of New Economic Thinking. Contact: yaroslav.melekh@ucl.ac.uk
Systems mapping and modelling, a study with Oxford University and four Chinese partners to inform options for integrated reform and decarbonisation of the Chinese electricity system. Funded by Quadrature Climate Fund and the UK Department for Energy Security and Net Zero. Contact: simonsharpe@climatechampions.team
To find out how our previous work shaped the establishment of the Centre for Net Zero Energy Market design, visit:
- Reforming electricity markets for low-cost and low carbon power
- Review of Electricity Market Arrangements (REMA): Second Consultation – response
Working papers
Read the working papers coming out of the Centre. For more working papers associated with energy markets visit Reforming electricity markets for low-cost and low carbon power.
Regulatory Impact Assessment in an era of energy transition: insights from the UK experience
Generating surplus: the challenges and opportunities of large-scale renewable deployment
Independent energy regulators need methodologies to assess and defend their regulatory decisions. This paper summarises major difficulties with the traditional economic recommendation, for quantified cost benefit analysis (CBA) as the dominant metric, particularly in the context of energy transitions for decarbonisation. We do so by exploring the theoretical and practical limitations of CBA, including limitations of exclusive reliance on emission targets and the ‘social cost of carbon’, and the Great British energy regulator Ofgem’s response to these.
Drawing on practical author experience at Ofgem, we outline the unavoidable complexities that climate change in particular creates regarding the division of responsibilities between government and regulator, and describe the major revisions to Ofgem’s Regulatory Impact Assessment (RIA) framework that sought to address the resulting challenges. Given the realities of purposive energy transition, we explain why Ofgem concluded that beyond aggregate CBA, regulatory decision-making benefits from structured articulation of component concerns around distributional consequences for energy consumers, and direct analysis of the strategic and sustainability implications. Finally, we summarise an application, and subsequent evolution, of the Ofgem RIA framework.
The UK depends on accelerated expansion of variable renewables, particularly offshore wind, to meet its clean power target by 2030. This paper explores the ways in which growing incidence of surplus electricity generation could undermine revenue certainty for future renewables investments, particularly given the current design of Contracts for Difference (CfDs). We draw on National Grid’s Future Energy Scenarios to project potential levels of surplus in 2030, with and without stylised sources of storage and flexibility. Without flexibility, we find surplus during up to 50-60% of hours. Around three quarters of potential output from an additional GW of wind capacity is generated during said periods of surplus. Therefore, without sufficient absorptive flexibility on the system, risks of economic curtailment and price cannibalisation could deter investment or inflate CfD bids, raising energy bills. Risk-reducing options to reform CfDs are currently under consideration, but involve several trade-offs; our findings ultimately emphasise the importance of proactive policy targeting the expansion of flexibility alongside renewables, to facilitate positive feedbacks between investment in both.
People
Professor Michael Grubb
Simon Virley CB FEI
"This Centre creates capacity for collaboration across industry, academia, and key stakeholders to tackle the issues of electricity market design for net zero. We aim to inform policy making towards a reformed system that incentivises investment in the right infrastructure whilst delivering affordable bills for consumers.” – Professor Michael Grubb
"No one organisation has all the answers when it comes to navigating the Energy Transition. So we have to find new ways to collaborate across government, industry and academia to find the best solutions. That is why I am pleased to be chairing the Advisory Board of UCL’s new Centre for Net Zero Market Design, which can help facilitate that sharing of views and collaboration. – Simon Virley CB FEI
KPMG, Simon Virley (Chair)
Centrica plc, Rajarshi Roy
DESNZ, Harry Mayhew*
Energy UK, Dhara Vyas
European Federation of Energy Traders, Mark Copley
National Grid, Chris Bennett
NESO, Lizzie Blaxland*
No.10 Delivery Unit, Phil McNally*
Northwestern University, Sante Fe Institute, Lynne Kiesling
Ofgem, Gavin Knott
Rothesay, David Land & Holly Cook
SSE Services plc, Alistair McGirr
UCL, David Shipworth
UKERC, Rob Gross
*Public organisations with direct responsibilities for developing, conducting and implementing government programmes participate with Ex-officio Observer status.
Researchers
Malte Jansen – Research Director
Dr Malte Jansen is an interdisciplinary researcher at the intersection of energy markets, finance, and policy, with a focus on achieving net-zero emissions through innovative collaboration and effective communication. He holds an honorary visiting researcher position at Imperial College London and is a Special Consultant at the Technical University of Denmark. Malte holds a Doctoral Degree in Renewable Energy and Energy Economics, a Master of Engineering, and a Bachelor of Engineering in Energy and Environmental Management from the University of Flensburg. His academic and professional journey includes pivotal roles at Imperial College London, Fraunhofer IEE, ERM and the Technical University of Denmark.
Malte has authored numerous high-impact journal articles, contributing valuable insights into the field of renewable energy. His research on hydrogen costs, contracts for difference, and the integration of renewable energy systems has been influential, published in high-impact journals, such as Nature Energy. His work has real-life impact with numerous media appearances, recognition in the field, and considerable influence on policy.
His research has been featured in over 150 media appearances across print, online news outlets, radio, and television. The work on Subsidy-Free Offshore Wind was covered in major publications like The Guardian, The Times, Forbes, and Der Spiegel highlighted his findings on the economic viability of offshore wind projects without subsidies. This research has helped shift public and policy perceptions towards the feasibility of large-scale renewable energy projects operating without financial aid.
Malte co-founded PowerSwarm, a network connecting over 650 energy professionals from industry and academia, fostering knowledge exchange and innovation. His work has garnered significant media attention, and he has delivered numerous invited talks and presentations, and policy dialogues, further establishing his presence and influence in the field of sustainable energy.
Claudia Brown
Claudia is a Research Fellow in Electricity Markets and Investment at the Institute for Sustainable Resources, University College London. Claudia’s research centres around energy policy and electricity market design, with a view to facilitating a rapid transition towards a net zero energy system in the UK. Her current research includes investigating the economics of surplus renewable generation as well as the impact of future policy design on the investment landscape for renewable energy technology. In previous work, she has evaluated options for UK wholesale and retail market reform to help tackle fuel poverty while accelerating domestic decarbonisation. A graduate of UCL’s MSc Economics and Policy of Energy and the Environment, Claudia has also employed qualitative methods to determine the factors driving and limiting biofuel production in the French context.
Serguey Maximov
Serguey is a Research Fellow in Energy Sustainability at the Institute for Sustainable Resources, University College London. With a background in mechanical engineering and a PhD in Energy Systems from the University of Edinburgh, Serguey employs qualitative analysis to evaluate the impact of policies on transitioning to a net-zero economy. His previous research has centred on modelling and optimising energy systems to effectively decarbonize heat and electricity supply, alongside designing and evaluating GHG mitigation policies for renewable energy implementation and energy efficiency in residential and industrial sectors.
Utilising his expertise in energy system modelling and data science, Serguey investigates the most efficient technological and policy pathways to reduce reliance on fossil fuels and other unsustainable technologies across various energy services essential for society. He has expanded his focus to examine the interaction between energy policy and investment in renewable energy, aiming to enhance understanding of how energy markets can operate more efficiently under higher renewable generation scenarios.
New UCL Masters Module on Electricity Market Design
ISR's international Masters Programme on Economics and Policy of Energy and Environment is pleased to announce the introduction of a new module on Electricity Market Design and Reform. Programme details will be announced during August 2024.
Partners
We're pleased to have received the support of Centrica plc, SSE, Rothesay and National Grid, which has enabled the Centre for Net Zero Market Design to launch.
We engage with corporate and philanthropic partners who share our vision of an electricity market which is robust, affordable, just and actively harnesses the opportunities for a decarbonised system. We seek to foster intelligent and collaborative exchanges between academia and wider sector stakeholders and provide independent, evidence-based recommendations to UK government and policy makers.
Our academic independence
Our partners are committed to the academic independence of all research produced by us, in keeping with the legal and moral requirement that philanthropic gifts do not afford donors any expectation of benefit.
Partner with us
Contact Anjali Singh, Senior Philanthropy Manager (The Bartlett) for information on how you can partner with us: advancement@ucl.ac.uk