Functie

Beschrijving

The current design of the European electricity markets is being challenged, especially in terms of its ability to cope with spot price volatility. Indeed, renewable dominated electricity systems are expected to generate electricity prices that are volatile and difficult to predict. The recent geopolitical crisis has moreover demonstrated the impact of fossil fuel supply interruptions on our electricity prices. As such, there are (to some extent paradoxical) concerns that today’s market structure (i) might not produce the required (firm) capacity additions because these have become too risky and (ii) can cause undesirable distributional effects (e.g. excessively rewarding existing generators to the detriment of electricity consumers in the event of price shocks).

The European Commission has recently (March 3) proposed to reform the EU’s electricity market design. To address the concerns mentioned ...