High levels of renewable energy penetration may ameliorate electricity industry problems such as excessive climate change emissions, high fossil fuel prices and susceptibility to fossil fuel flow constraints. However, non-storable renewable energy resources such as wind and solar energy bring their own challenges and we cannot take for granted their successful integration into electricity industries at high levels of penetration. For example, concerns have been expressed about increased risk of blackouts.

This paper reviews the context that a modern competitive electricity industry provides for renewable energy integration and considers the technical, economic and regulatory steps that should be taken to increase the prospects for successful integration. These include fundamental questions about electricity industry design related to industry structure, electricity market design, security management and network services, as well as specific renewable energy issues such as resource forecasting and technical performance requirements for renewable energy generators. The Australian National Electricity Market and the Western Australian electricity market are used as case studies with different electricity industry design characteristics.