With government subsidies for renewables fading, clean power plants rely more and more on straight sales of electricity to be profitable. Where there is a wholesale market, the influx of low-marginal-cost wind and solar power plants pulls down realized electricity prices, increasing the risk that these generators cannot turn a profit. As such, policymakers should ensure there are competitive price signals for capacity development and dispatch. As well as encouraging an open and liquid market (for more on PPAs, see Pillar 1: Power and grids), options include introducing subsidy-free auctions and enabling renewables generators to participate in security-of-supply mechanisms.
In some liberalized power markets, regulators have implemented capacity mechanisms that reward the capability to provide power when the system needs it, on top of payments for actually providing electricity and ancillary services such as frequency adjustment.