To match supply from intermittent renewable energy sources (RES) with demand, it is proposed in literature to introduce flexibility in the electricity market of the future. Flexibility can be provided by energy storage, demand response and cross-border transmission. In this thesis flexibility is modeled explicitly through the price mechanism of demand and supply.
This price mechanism can be made explicit with the principles of Economic Engineering. With that price mechanism a price-dynamic bond graph model of the electricity market of the future is built. This model can be used with the various tools that control engineering has to offer to aid investors and regulators in designing the electricity market of the future.
It can aid specifically in determining the adequate generation capacity, but also in determining the necessary power and energy capacity of storage, demand response and cross-border transmission.

As an example of application, this thesis demonstrates the use of the price-dynamic model by simulating a future scenario. By simulating trading behavior of a market participant the change of prices for a market with flexibility can be quantified. It is shown that passive control does not represent realistic trading behavior, so optimal control is used. To this end, an Economic Model Predictive Controller (EMPC) is designed to simulate how market prices change when a trader maximizes his profits through energy arbitrage. Based on these price changes it is advised that the Transmission System Operator (TSO) implements an energy storage reserve market to account for risk and ensure grid stability in the electricity market
of the future.