The European wholesale electricity market: from crisis to net zero
(2022) , 90 pages
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- Abstract
- The aim of this report is to examine wholesale electricity market design and proposed changes and interventions in the light of Europe’s current energy crisis and climate neutrality goals. While much of what we discuss is motivated by the crisis we are facing, any short-term action may have lasting repercussions, and we draw out some initial learnings on what this means for energy market regulation as Europe tries to move out of this crisis and towards net zero. Wholesale and retail electricity markets are closely linked, and this paper is a companion paper to our recent CERRE paper on retail energy markets (von der Fehr et al., 2022). This European energy price and supply crisis, triggered by Russia’s invasion of Ukraine, is severe and unprecedented in the history of the single market in gas and electricity. It is impacting households, industries, and energy companies experiencing liquidity issues and/or bankruptcy risk. It is a wake-up call for energy analysts, regulators, and policy makers on the need for and the implications of a net zero energy system, which will have high-priced marginal units of energy.
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Citations
Pollitt, M., von der Fehr, N.-H., Banet, C., & Willems, B. (2022). The European wholesale electricity market: from crisis to net zero. https://hdl.handle.net/2078.5/255980