IDEAS home Printed from https://ideas.repec.org/a/spr/ijoeps/v13y2019i1d10.1007_s42495-018-0009-0.html
   My bibliography  Save this article

European energy market liberalization: experiences and challenges

Author

Listed:
  • Guido Pepermans

    (Centre for Economics and Corporate Sustainability)

Abstract

The European electricity market liberalization process started more than 20 years ago, one of its main purposes being to organize the provision of electricity and gas more efficiently by introducing competitive forces where possible and regulation where needed. Despite the fact that most Member States of the European Union (EU) have liberalized their electricity market, a European internal market for electricity—one of the ultimate goals of EU energy policy—has not been realized yet. For this to be realised a number of remaining obstacles need to be removed. This paper gives a brief overview of the EU electricity market liberalization process and surveys the main remaining issues and challenges. At the retail market level, additional efforts are required to increase retail competition and to remove regulated retail prices. Also, more effort is required to physically integrate existing regional electricity markets, by removing the existing barriers between regions and countries. Building new interconnection capacity and improving the allocation procedures for cross-border capacities can help achieving this. Furthermore, the EU should increase efforts to further harmonize and integrate electricity markets and electricity market policies and to encourage the demand-side of the market to participate more intensively through demand response.

Suggested Citation

  • Guido Pepermans, 2019. "European energy market liberalization: experiences and challenges," International Journal of Economic Policy Studies, Springer, vol. 13(1), pages 3-26, January.
  • Handle: RePEc:spr:ijoeps:v:13:y:2019:i:1:d:10.1007_s42495-018-0009-0
    DOI: 10.1007/s42495-018-0009-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s42495-018-0009-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s42495-018-0009-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kanellakis, M. & Martinopoulos, G. & Zachariadis, T., 2013. "European energy policy—A review," Energy Policy, Elsevier, vol. 62(C), pages 1020-1030.
    2. Poudineh, Rahmatallah & Jamasb, Tooraj, 2014. "Distributed generation, storage, demand response and energy efficiency as alternatives to grid capacity enhancement," Energy Policy, Elsevier, vol. 67(C), pages 222-231.
    3. Severin Borenstein & Stephen Holland, 2005. "On the Efficiency of Competitive Electricity Markets with Time-Invariant Retail Prices," RAND Journal of Economics, The RAND Corporation, vol. 36(3), pages 469-493, Autumn.
    4. Glachant, Jean-Michel & Ruester, Sophia, 2014. "The EU internal electricity market: Done forever?," Utilities Policy, Elsevier, vol. 30(C), pages 1-7.
    5. de Jong, Jacques & Hassel, Arndt & Egenhofer, Christian & Jansen, Jaap & Xu, Zheng, 2017. "Improving the Market for Flexibility in the Electricity Sector," CEPS Papers 13093, Centre for European Policy Studies.
    6. Maria Ioannidou, 2018. "Effective Paths for Consumer Empowerment and Protection in Retail Energy Markets," Journal of Consumer Policy, Springer, vol. 41(2), pages 135-157, June.
    7. Pepermans, G. & Driesen, J. & Haeseldonckx, D. & Belmans, R. & D'haeseleer, W., 2005. "Distributed generation: definition, benefits and issues," Energy Policy, Elsevier, vol. 33(6), pages 787-798, April.
    8. Glachant, Jean-Michel & Ruester, Sophia, 2014. "The EU internal electricity market: Done forever?," Utilities Policy, Elsevier, vol. 31(C), pages 221-228.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Di Foggia, Giacomo & Beccarello, Massimo, 2024. "Designing New Energy Markets to Promote Renewables," MPRA Paper 121783, University Library of Munich, Germany.
    2. Anne Kesselring, 2023. "Willingness-to-Pay for Energy Efficiency: Evidence from the European Common Market," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(4), pages 893-945, December.
    3. Nazim Hajiyev & Klaudia Smoląg & Ali Abbasov & Valeriy Prasolov, 2020. "Energy War Strategies: The 21st Century Experience," Energies, MDPI, vol. 13(21), pages 1-15, November.
    4. Charis Vlados & Dimos Chatzinikolaou & Foteini Kapaltzoglou, 2021. "Energy Market Liberalisation in Greece: Structures, Policy and Prospects," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 115-126.
    5. Rettig, E. & Fischhendler, I. & Schlecht, F., 2023. "The meaning of energy islands: Towards a theoretical framework," Renewable and Sustainable Energy Reviews, Elsevier, vol. 187(C).
    6. Štefan Bojnec & Alan Križaj, 2021. "Electricity Markets during the Liberalization: The Case of a European Union Country," Energies, MDPI, vol. 14(14), pages 1-21, July.
    7. Lina Montuori & Manuel Alcázar-Ortega, 2021. "District Heating as Demand Response Aggregator: Estimation of the Flexible Potential in the Italian Peninsula," Energies, MDPI, vol. 14(21), pages 1-19, October.
    8. Luís Sousa Rodrigues & Daniel Lemos Marques & Jorge Augusto Ferreira & Vítor António Ferreira Costa & Nelson Dias Martins & Fernando José Neto Da Silva, 2022. "The Load Shifting Potential of Domestic Refrigerators in Smart Grids: A Comprehensive Review," Energies, MDPI, vol. 15(20), pages 1-36, October.
    9. Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "A three-step procedure to investigate the convergence of electricity and natural gas prices in the European Union," Energy Economics, Elsevier, vol. 105(C).
    10. René Bohnsack & Francesca Ciulli & Ans Kolk, 2021. "The role of business models in firm internationalization: An exploration of European electricity firms in the context of the energy transition," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(5), pages 824-852, July.
    11. Serra, Daniele & Mardero, Daniele & Di Stefano, Luca & Grillo, Samuele, 2021. "Post-metering value-added services for low voltage electricity users: Lessons learned from the Italian experience of CHAIN 2," Applied Energy, Elsevier, vol. 304(C).
    12. Do, Hung Xuan & Nepal, Rabindra & Pham, Son Duy & Jamasb, Tooraj, 2024. "Electricity market crisis in Europe and cross border price effects: A quantile return connectedness analysis," Energy Economics, Elsevier, vol. 135(C).
    13. Stelian GRASU & Ruxandra Madalina POPP & Marius George POPA, 2023. "Energy Price Liberalization Consequences on Energy Production Market in the European Union," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 24(2), pages 251-260, May.
    14. Sikorska-Pastuszka, Magdalena & Papież, Monika, 2023. "Dynamic volatility connectedness in the European electricity market," Energy Economics, Elsevier, vol. 127(PA).
    15. Vasile Dinu & Leonina Emilia Baciu & Maria Mortan & Vincentiu Andrei Veres, 2023. "Effect of Economic, Institutional and Cultural Factors on the Implementation of EU Energy Policies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 306-306, April.
    16. Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "EU electricity market integration and cross-country convergence in residential and industrial end-user prices," Energy Policy, Elsevier, vol. 165(C).
    17. Aleksandra Matuszewska-Janica & Dorota Żebrowska-Suchodolska & Mariola E. Zalewska & Urszula Ala-Karvia & Marta Hozer-Koćmiel, 2023. "Differences in the Structure of Household Electricity Prices in EU Countries," Energies, MDPI, vol. 16(18), pages 1-23, September.
    18. Anvar Tulaganov & Gulnara Sagindykova & Murad Isaev & Bibigul Bimbetova & Maira Kaiyrgaliyeva & Bakhitzhamal Aidosova & Aizhan Orynbassarova, 2022. "The Impact Analysis of Electricity Prices on the Energy Intensity of the Kazakhstani Economy and Sustainable Development," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 241-248, March.
    19. Grasu Stelian & Popp Ruxandra Mădălina, 2023. "An Overview of the European Union Legislation Regarding the Natural Gas Market," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 17(1), pages 411-418, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ramos, Ariana & De Jonghe, Cedric & Gómez, Virginia & Belmans, Ronnie, 2016. "Realizing the smart grid's potential: Defining local markets for flexibility," Utilities Policy, Elsevier, vol. 40(C), pages 26-35.
    2. Karsten Neuhoff & Sophia Rüster & Sebastian Schwenen, 2015. "Power Market Design beyond 2020: Time to Revisit Key Elements?," Discussion Papers of DIW Berlin 1456, DIW Berlin, German Institute for Economic Research.
    3. Zajdler, Robert, 2020. "The role of capacity in the EU internal electricity market in the context of the general court's judgment of 15 November 2018. In case T-793/14 Tempus energy," Energy Policy, Elsevier, vol. 143(C).
    4. Joalland, Olivier & Pereau, Jean-Christophe & Rambonilaza, Tina, 2019. "Bargaining local compensation payments for the installation of new power transmission lines," Energy Economics, Elsevier, vol. 80(C), pages 75-85.
    5. Griffiths, Steven, 2017. "A review and assessment of energy policy in the Middle East and North Africa region," Energy Policy, Elsevier, vol. 102(C), pages 249-269.
    6. Charis Vlados & Dimos Chatzinikolaou & Foteini Kapaltzoglou, 2021. "Energy Market Liberalisation in Greece: Structures, Policy and Prospects," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 115-126.
    7. Torriti, Jacopo, 2014. "Privatisation and cross-border electricity trade: From internal market to European Supergrid?," Energy, Elsevier, vol. 77(C), pages 635-640.
    8. Gaffney, F. & Deane, J.P. & Gallachóir, B.P.Ó, 2017. "A 100 year review of electricity policy in Ireland (1916–2015)," Energy Policy, Elsevier, vol. 105(C), pages 67-79.
    9. Hyland, Marie, 2016. "Restructuring European electricity markets – A panel data analysis," Utilities Policy, Elsevier, vol. 38(C), pages 33-42.
    10. Bigerna, Simona & Bollino, Carlo Andrea & Ciferri, Davide & Polinori, Paolo, 2017. "Renewables diffusion and contagion effect in Italian regional electricity markets: Assessment and policy implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P1), pages 199-211.
    11. Ringler, Philipp & Keles, Dogan & Fichtner, Wolf, 2017. "How to benefit from a common European electricity market design," Energy Policy, Elsevier, vol. 101(C), pages 629-643.
    12. Bigerna, Simona & D'Errico, Maria Chiara & Polinori, Paolo, 2020. "Heterogeneous impacts of regulatory policy stringency on the EU electricity Industry:A Bayesian shrinkage dynamic analysis," Energy Policy, Elsevier, vol. 142(C).
    13. de Frutos Cachorro, J. & Willeghems, G. & Buysse, J., 2019. "Strategic investment decisions under the nuclear power debate in Belgium," Resource and Energy Economics, Elsevier, vol. 57(C), pages 156-184.
    14. Lockwood, Matthew & Froggatt, Antony & Wright, Georgina & Dutton, Joseph, 2017. "The implications of Brexit for the electricity sector in Great Britain: Trade-offs between market integration and policy influence," Energy Policy, Elsevier, vol. 110(C), pages 137-143.
    15. Do, Hung Xuan & Nepal, Rabindra & Pham, Son Duy & Jamasb, Tooraj, 2024. "Electricity market crisis in Europe and cross border price effects: A quantile return connectedness analysis," Energy Economics, Elsevier, vol. 135(C).
    16. Hélène Le Cadre & Anthony Papavasiliou & Yves Smeers, 2015. "Wind Farm Portfolio Optimization under Network Capacity Constraints," Post-Print hal-01007992, HAL.
    17. Jean-Michel Glachant, 2014. "Governance in Network Industries: Lessons Learnt from New Institutional Economics," RSCAS Working Papers 2014/67, European University Institute.
    18. Nguyen, Phuong H. & Blaauwbroek, Niels & Nguyen, Cuong & Zhang, Xu & Flueck, Alexander & Wang, Xiaoyu, 2017. "Interfacing applications for uncertainty reduction in smart energy systems utilizing distributed intelligence," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 1312-1320.
    19. Lindberg, Marie Byskov & Markard, Jochen & Andersen, Allan Dahl, 2019. "Policies, actors and sustainability transition pathways: A study of the EU’s energy policy mix," Research Policy, Elsevier, vol. 48(10).
    20. Nikolaos Koltsaklis & Athanasios Dagoumas, 2018. "Policy Implications of Power Exchanges on Operational Scheduling: Evaluating EUPHEMIA’s Market Products in Case of Greece," Energies, MDPI, vol. 11(10), pages 1-26, October.

    More about this item

    Keywords

    Electricity market; Liberalisation; European Union; Challenges;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:ijoeps:v:13:y:2019:i:1:d:10.1007_s42495-018-0009-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.