Working paper / Electricity
Mapping the course of the EU “Power Target Model”… on its own terms
The European Union took more than 20 years to start defining a common market design for its internal electricity market: a European Power Target Model. And, a further 10 years to fully implement it. Meanwhile, the reference generation set of that model has shifted from CCGT burning gas to RES units transforming intermittent natural resources. Could the existing EU target model continue to work well for the short- term operation and long-term investment? If not, can the existing EU institutions easily produce an "RES resilient" new power target model?
The European Union has a “continent scale” power target model; while the USA and Canada have no such model. But, it took decades (since the first “internal market” directive in 1996) to produce it, and it largely relies on the former concept of EU- wide “cross-border CCGT competition”. The corresponding market pricing is zonal and mainly Day-Ahead; the power system operation is also zonal, both intra-day or “real-time”. Will this Target Model resist the integration of massive renewables? Would the EU easily produce a new Target Model to integrate massive renewables? Or, would it prefer to keep the existing one and upgrade it with a few “add-ons”? I do not yet foresee if the EU will succeed in undertaking all of the challenging but necessary “target model” upgrades to enter soon a 2030 forward- looking strategy.