The internal market for electricity: not just a story of market coupling
The EU claims to have an internal market for electricity already in place. Nowadays, most of the national power markets in Europe are coupled for the day-ahead transactions.
Nonetheless, are we sure that the European set of grids and power plants is operated as a single seamless system?
Are national borders disappeared for market operators? Are all plants in all countries of the continent not discriminated when the market’s merit order is defined?
Is operation of the European interconnected grid for electricity promoting the efficient use of all available resources, included the renewables installed in the last few years?
And finally, are we sure that extreme events like the cold spell of January 2017 are already addressed with the highest levels of service reliability?
These questions must be taken into account because an electric market of European size can work well only if:
- the system is coordinated well enough across borders;
- there is a clear enough framework for the allocation of the costs and benefits of a European-wide coordination;
- there is a real spirit of solidarity expanding beyond day-to-day cost and benefit responsibility.
The Florence School of Regulation is investigating these fascinating topics in the context of the Winter Package released last November and will soon come out with a new research report.
To prepare your mind, you could take a look back at our previous report on the future of the European TSOs published in 2015. There you can find answers to the questions:
- What are the main forces driving the deepest changes in the power transmission industry?
- What are the alternative futures the European TSOs will face in the coming decades?