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Recommendations for a future-proof electricity market design in Europe in light of the 2021-23 energy crisis

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  • Pollitt, Michael G.
  • von der Fehr, Nils-Henrik M.
  • Willems, Bert
  • Banet, Catherine
  • Le Coq, Chloé
  • Chyong, Chi Kong

Abstract

In this paper, we discuss electricity market design in Europe in light of the 2021-23 energy crisis, drawing on several of our Centre on Regulation in Europe (CERRE) reports. We outline the relevant theoretical background with respect to wholesale electricity markets, retail electricity markets, excess profits regulation, renewables support schemes and emergency interventions. We next outline the responses of the European Union, France, Norway, the Netherlands and Great Britain to the crisis. This allows us to make a number of recommendations about the future design of the electricity market in the light of theory and recent experience. These include a role for long-term contracts, the extension of the single market, the place for increased price granularity, appropriate energy taxation and the necessity of better monitoring of National Energy and Climate Plans to ensure adequate aggregate investment.

Suggested Citation

  • Pollitt, Michael G. & von der Fehr, Nils-Henrik M. & Willems, Bert & Banet, Catherine & Le Coq, Chloé & Chyong, Chi Kong, 2024. "Recommendations for a future-proof electricity market design in Europe in light of the 2021-23 energy crisis," Energy Policy, Elsevier, vol. 188(C).
    • Handle: RePEc:eee:enepol:v:188:y:2024:i:c:s0301421524000715
    DOI: 10.1016/j.enpol.2024.114051
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    More about this item

    Keywords

    Electricity market design; Energy crisis; Retail electricity; Wholesale electricity;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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