Europe’s transition to carbon neutrality requires coordinated policy alignment alongside significant changes in energy system planning and operation. The large-scale deployment of variable renewable energy sources (vRES), particularly wind and solar PV, is central to decarbonising the power sector; however, their inherent variability increases the need for system flexibility to maintain supply–demand balance.

In this context, the Man0EUvre project under the EU Clean Energy Transition Partnership (CETP) developed four scenarios to explore alternative pathways: EU Trinity, NECP Essentials, REPowerEU++, and Go RES. These scenarios are modelled using the open-source GENeSYS-MOD energy system model, which optimises capacity expansion, generation portfolios, and flexibility requirements. The framework is used to analyse how differing policy ambitions and technological assumptions affect investment needs, technology mix, and system flexibility.

Building on the optimal capacities obtained from GENeSYS-MOD for Portugal and Spain, this work analyses the participation of different vRES players in the Iberian day-ahead market (DAM) and the Portuguese balancing market. The DAM is simulated with the open-access tool PyMIBEL-DAM, based on the Python for Power System Analysis (PyPSA) framework, while the balancing market is simulated using the open-access Multi-Agent Trading of Renewable Energy Sources (Trade.RES) simulator. The analysis is conducted at five-year intervals from 2030 to 2060, enabling an assessment of temporal evolution of market participation and operational dynamics across the different scenarios.

Results show that scenarios such as EU Trinity, characterised by a slow deployment of both vRES and storage, maintain a persistent reliance on thermal generation, leading to higher wholesale prices and increased volatility. This contrasts with more ambitious pathways (e.g., REPowerEU++ and Go RES), where faster expansion of vRES and batteries reduces DAM prices and introduces effects such as the solar PV cannibalisation. In all scenarios, limiting the vRES participation to DAM leads to lower remuneration for these players and increased balancing needs. In contrast, the active participation of vRES in both markets increases market-based captured prices through revenue diversification while improving system flexibility.

The findings emphasise the need to carefully plan the required energy transition and design future electricity markets considering the intrinsic characteristics of vRES to promote their active participation while ensuring the efficient and reliable system operation.

This research was funded by CETPartnership, the Clean Energy Transition Partnership under the 2022 joint call for research proposals, co-funded by the European Commission (GA N°101069750) and with the funding organizations detailed on https://cetpartnership.eu/funding-agencies-and-call-modules, in specific, the FCT - Fundação para a Ciência e a Tecnologia (CETP/0001/2022).