In a report the consultancy firm said European electricity regulators and policymakers need to recognise that the model for energy market design that underpins much of their policies “is no longer fit for purpose.”
Pöyry said the systems designed to introduce competition and innovation to markets, such as competitive markets in generation and supply, the regulation of networks and the break-up of vertical integration “now risks stifling the next generation”.
Pöyry is urging organisations to bridge the “artificial” divisions between sectors, which although beneficial, are also creating situations where one sector’s cause is another’s problem.
Pöyry consultant Phil Hare said: “In the last decade there has been a significant move from stable power systems dominated by fleets of large thermal plants that could deliver many necessary system support services, such as frequency control and voltage regulation, that were needed to keep the system running.
“Many of these plants have retired, or will retire soon, and at the same time renewables are growing rapidly. Many of the renewables are intermittent and many of the projects are connected to distribution networks operating at lower system voltages.
“The concept of a homogenous network is now outdated with new challenges and opportunities becoming the norm.”
Pöyry said the European Union 2020 renewables target and longer term decarbonisation ambitions are only going to accelerate the growing problem.