Electricity Market Design of Megacities with 100% Renewable Energy System: Investigation, Assessment and Evaluation of Market Structures for NEOM Megacity

Abstract

The focus of this research is to investigate the electricity market design for a completely renewable energy system. Specifically, the study evaluates long-term capacity adequacy and short-term operation flexibility for supply and flexibility, respectively. The research is conducted through a case study on NEOM megacity—a planned economic city in the Tabuk Province of Northwestern Saudi Arabia. The rationale behind this study is the need for empirical work to identify electricity market design options for a completely renewable energy system. The twin opportunity and challenge of NEOM is the construction of the city from scratch, meaning the nature of the investigation is not related to an energy transition that is commonly the case in other studies. This provides a new perspective in examining prospective energy system and markets. To address this challenge, the dissertation harnesses a combination of relevant literature and empirical research to propose market designs for the energy sector of NEOM in 2030. This is implemented through evaluation criteria containing 10 distinctive performance indicators for the three market designs proposed for assessment. Where, Model I is based on principal-buyer market and long-term contracts; Model II is an optimisation of dual-market design concept with ‘flexibility suppliers’, and Model III is based on an evolution of competitive wholesale markets, where short- term and long-term markets work together to achieve market objectives. The outcomes of this study suggest that Model I is suitable for the short-term due to the strong price signals that can attract actors immediately and provide adequate incentives for capacity build-up. Model II is suitable for short to medium term and can be designed as bases for a transition from Model I. Finally, Model III is suitable for medium to long-term when market experiences and technology advances become more apparent to send the right incentive signals.