The european target model for electricity markets – achievements to date and key enablers for the emergence of a new model

Authors

Fabien Roques

Abstract

The European target model for electricity markets has been shaped over the past three decades by successive legislations and reforms. The initial focus in the 1990s was on creating an integrated market fostering efficient cross border trade and competition, which delivered significant benefits and is still ongoing via the Network Codes and the Clean Energy Package implementation process. However, the paper shows how changing policy priorities in the 2000s focussed on climate change and security of supply have create news challenges for market integration through a revival of national uncoordinated state interventions. European electricity markets have therefore in recent years evolved toward a patchwork of hybrid markets featuring: i) support mechanisms for clean technologies; ii) capacity mechanisms addressing security of supply concerns; and iii) new planning processes to coordinate generation and grid development. The paper then shows how these hybrid markets have a number of common features and explores the conditions for the emergence of a more structured and coordinated new target model, chief among them a more integrated approach towards planning and deployment of key infrastructures, and greater coordination of some of the underlying policies and governance processes.