A Comprehensive Review and Analysis of Energy Market Mechanisms and Power System Flexibility

The integration of variable renewable energy (VRE) sources has driven research into the flexibility capabilities of power systems, which are characterized by high variability and uncertainty.Flexibility refers to a power system's ability to respond to changes in demand and generation across different time frames.This concept has been extensively studied in the literature, so the great variety of flexibility definitions and market approaches is a challenge for new stakeholders interested in the field.Establishing a market design that promotes the participation of flexible sources and ensures proper compensation is essential.This paper provides a comprehensive review of market designs proposed in the literature to enhance power system flexibility and approaches for quantifying its economic value.The study follows the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) methodology for the identification, screening, and inclusion of documents, using Web of Science (WOS) and Scopus databases.After analyzing 102 papers, including 50 literature reviews, common approaches and concepts were identified and categorized into demand response, storage, market design, and other general frameworks.Among the market design proposals, the Flexible Ramp Products and Local Flexibility Markets are highlighted, along with an analysis of how to value this flexibility.This study complements existing literature by grouping the most relevant literature on power system flexibility and its valuation in energy markets, clarifying how market designs contribute to addressing renewable integration challenges-essential for future energy system planning with increased renewable energy penetration.