OIES Podcast – The complex challenge of coordination in liberalised and carbon-constrained energy systems

In this latest OIES podcast from the Electricity Programme, Anders Hove talks to Dimitra Apostolopoulou about her latest paper co-authored with Rahmat Poudineh titled “The complex challenge of coordination in liberalised and carbon-constrained energy systems”. The discussion highlights how the growing number of actors—from large transmission operators to prosumers with solar panels—and interdependencies between sectors make coordination, particularly under the demanding goals of decarbonisation, challenging. They discuss how coordination frictions arise from misaligned incentives, incomplete information, and market timing mismatches, as well as structural forces, such as digitalisation, extreme weather and cybersecurity. They explain why, given the complexity of the energy system, systemic risks and operational constraints associated with net zero, pure liberalisation and market signals cannot, by themselves, deliver efficient outcomes. Instead, the podcast stresses the need for a “hierarchy-anchored hybrid” governance model that balances authoritative oversight, market mechanisms, and network collaboration. For policymakers and regulators, the takeaway is that, at this stage of energy transition, reducing coordination failures may bring greater system benefits than solely focusing on cutting technology costs, and that stronger standards, synchronised market design, and clear net-zero pathways are essential for a secure, resilient, and sustainable energy transition.

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