Flexibility is a prized characteristic in power systems with significant variable renewable energy. How this flexibility is procured is strongly shaped by the regulatory context. Vertically integrated utilities typically use contractual or policy mechanisms to extract flexibility from generators. In contrast, in partially or wholly restructured power markets, system operators use market designs—with clear definitions of performance requirements—to incentivize the provision of power system flexibility. This fact sheet reviews administrative and market-based mechanisms for procuring a cost-effective mix of flexible resources needed to ensure system reliability and adequacy.
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