<mark>in The National Electricity Market (NEM) of Australia. These findings were consistent with an analysis conducted by</mark> (Rai & Nunn, 2020) <mark>, where it was concluded that with case-specific advancements and enhancements (like increased interconnection, increased storage integration, active demand participation, or consistent contract cover)</mark> energy-only markets could operate sustainably under high and increasing VRE penetration <mark>. Similarly, (Simshauser, 2020) has taken the case of Australia for the analytical valuation assessment of merchant gas turbines, merchant wind generators, and an integrated portfolio. There is, again, nothing in their analysis that suggests that energy-only markets are incompatible with attaining environmental objectives and meeting adequate resource needs. In fact, the analysis indicated that resource adequacy could be maintained in different forms of portfolio integration, making renewable and flexible assets more bankable. In another work (Simshauser, 2019) investigates government-initiated Contract for Differences (CfDs), as a measure to adapt energy-only markets to the changing environment and to achieve deeper penetration of VREs and lower CO</mark> 2 <mark>emissions. It is discussed that if applied prudently, such CfDs can overcome a series of market failures, which are usually used as an argument to introduce various capacity mechanisms, including those associated with missing or incomplete markets. The risk of these measures is to, in some way, reduce the role of the spot market as participants who are locked into a CfD may have a perverse incentive to bid low to deliver its contracted volume or not participate in the forward market at all.</mark> <mark>Theoretically, the merit order effect of zero-marginal cost renewables integration in the energy-only market should lead to more volatile and extreme prices during peak (and hence a regulatory push to increase price caps to contain reliability and adequacy), but may also depress prices during off-peak, including increased incidences of negative prices. The literature reveals quite distinct outcomes. (</mark> Rai & Nunn, 2020) <mark>challenged these statements with evidence of the South Australian market. It was found that the simultaneous natural evolution of the market towards more interconnection and storage, broader contract coverage, more responsive demand, and revenues from the FCAS market caused lower than expected rise in volatility and no compromise in reliability. On the other hand, (Gholami et al., 2021) evaluated the energy-only market of New Zealand and concluded that the current design is unsuitable for approaching a 100% renewable share system, with inadequate revenues and highly depressed prices.</mark> <mark>Similar to Australia’s NEM, the Electric Reliability Council of Texas (ERCOT) is another prominent largescale market committed to energy-only procurement.</mark> (Hogan & Pope, 2017) <mark>investigated</mark> high-level issues that have affected ERCOT’s operation in recent years and recommended a series of design improvements, keeping the fundamental structure of the energy-only market. They indicate that while the implementation of the Operating Reserve Demand Curve (ORDC) was an essential step in the evolution of the market, some enhancements might be needed to cope with it. In (Botterud & Auer, 2020) <mark>, after a careful comparison of energy-only markets and capacity mechanisms in the US and Europe, it was concluded that it is first necessary to achieve better integration of VRE into current electricity markets to improve the energy-only market. The use of capacity mechanisms should be viewed as a backup solution, which is to be implemented only when long-term price formation is insufficient to ensure investment incentives. (Thomaßen et al., 2022) have extensively explored the suitability of an energy-only market for a decarbonization process, examining whether such a market will allow investors in generation assets to accommodate sufficient margins for the recovery of their original investment in such assets. Based on the combination of theoretical and analytical discussion, they established that current markets could align low carbon goals and scenarios with the outcomes of a competitive market. Two key ingredients were (1) selecting an appropriate carbon pricing mechanism, which will incentivize new carbon-free investments, and (2) allowing for involuntary load shedding, which will set scarcity price whenever it occurs, providing an adequate level of supply security.</mark> 14