Energy | Working Paper
The integration of the European electricity markets at a turning point: from the regional model to the Third Legislative Package
09 July 2010
BY: SQUICCIARINI Giuseppina, CERVIGNI Guido, PEREKHODTSEV Dmitri, Clara Poletti
In this paper we discuss the EU policy on electricity markets integration by reviewing the experience of the Electricity Regional Initiatives. The regional approach to market integration delivered important results in areas such as coordination among national transmission system operators, implementation of market-based mechanisms for cross-border transmission capacity allocation and transparency. Furthermore, the inclusive governance process lead by ERGEG gave voice to all relevant stakeholders. However, there are indications that the regional model reached its limit when faced with the objective of coordinating day-ahead and real-time markets. The unanimity approach at the regional level made the intra-regional decision-making process extremely slow. Further, inter-regional integration issues have not been solved yet and attempts to tackle them by prioritising projects in some Regions weakened the pluralistic attributes of the regional model. The Third Legislative Energy Package has the potential to overcome some of these shortcomings by empowering pan-European institutions (ENTSO and ACER) and by involving Member States in the decision making process. Some weaknesses of the second-package, though, persist in the new framework. First, there are no provisions ensuring that ENTSO will have appropriate incentives to act in the interest of European consumers. Second, the Third Package perpetuates the separation between within-country congestion management – which remains a national issue – and cross-border congestion management – to be dealt with at the EU level. This two-tier approach is inconsistent with the highly meshed nature of the European network and is likely to result in inefficient market design. Further, the implementation of coordinated cross-border and national congestion management mechanisms requires considering geographically differentiated prices within countries, a politically unattractive result for most Member States.
logo cadmus Read it on Cadmus Download in open access

LATEST FSR PUBLICATIONS

Article
To fulfill the Paris Agreement commitments and stimulated by an unprecedented amount of public resources put in place to recover from the COVID-induced recession, European governments have recently announced sizable [...]
Technical Report
India has embarked on an ambitious sustainable development pathway by applying a multipronged approach spanning several sectors from developing smart cities to enabling electric vehicles. In the power sector, it [...]
Technical Report
To increase the share of RES-E, governments have designed and implemented promotional policies which provide direct and indirect financial aid to RES-E adapters and developers. These promotional policies include several [...]
Other
About 1,100 TWh of natural gas can be stored in 115 storage facilities in 19 countries in the EU27 area, accounting for 25-30% of European consumption in winter periods. Securing [...]
Other
The outbreak of the Russia-Ukraine war has revived discussions on the EU’s dependence on fossil fuel imports from Russia. To ensure gas diversification, the EU Commission has suggested over a [...]
Other
The recent surge in energy prices has prompted many governments to introduce emergency measures to reduce the impact on consumers’ electricity and gas bills. In its REPowerEU Communication of 8 [...]

Join our community

To meet, discuss and learn in the channel that suits you best.

scroll

top