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European energy market liberalization: experiences and challenges

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  • 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
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    Cited by:

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    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. Hung Xuan Do & Rabindra Nepal & Son Duy Pham & Tooraj Jamasb, 2023. "Electricity Market Crisis in Europe and Cross Border Price Effects: A Quantile Return Connectedness Analysis," CAMA Working Papers 2023-46, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    7. 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).
    8. 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.
    9. 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.
    10. 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).
    11. 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.
    12. 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.
    13. 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.
    14. 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).
    15. 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.
    16. 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.
    17. Sikorska-Pastuszka, Magdalena & Papież, Monika, 2023. "Dynamic volatility connectedness in the European electricity market," Energy Economics, Elsevier, vol. 127(PA).

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    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

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