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How to make a European integrated market in small and isolated electricity systems? The case of the Canary Islands

  • Perez, Yannick
  • Ramos Real, Francisco Javier

This paper presents a geographic dimension not often studied in the dynamics of creating an internal market for electricity within the European Union, namely the case of small European electricity systems like those found on the Greek islands of Cyprus and Crete. Our question, then, is how to achieve a suitable internal market for electricity in small and isolated systems. To address this issue, we identify the main problems to be overcome by introducing a methodology in which the Canary Islands experience is taken as a case study for understanding the challenges in creating an "EU-like market for electricity". Our results show that the design of the vertical industrial structure and the figure of the grid operator and its attributes are key features for the proper operation of any electrical system. We also stress the minor roles of other possible options to achieve this EU-compatible market by highlighting first, in the wholesale market, the call-for-tender solution to introduce more generation and the risk of using safety requirements as barriers to entry in these small markets, and second, in the supply activities, the potential problems of an improperly regulated tariff scheme.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 11 (November)
Pages: 4159-4167

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Handle: RePEc:eee:enepol:v:36:y:2008:i:11:p:4159-4167
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Crampes , C. & Fabra , N., 2005. "The Spanish Electricity Industry: Plus ça change …," Cambridge Working Papers in Economics 0502, Faculty of Economics, University of Cambridge.
  2. Peter Cramton & Steven Stoft, 2006. "The Convergence of Market Designs for Adequate Generating Capacity," Papers of Peter Cramton 06mdfra, University of Maryland, Department of Economics - Peter Cramton, revised 2006.
  3. José Ignacio Sánchez-Macías & Pedro Calero Pérez, 2003. "Regulación de las tarifas de acceso a las redes y liberalización del sector eléctrico español," Hacienda Pública Española, IEF, vol. 166(3), pages 61-83, September.
  4. Stephen Littlechild, 2007. "Beyond regulation," Chapters, in: Utility Regulation in Competitive Markets, chapter 1 Edward Elgar.
  5. Weisser, Daniel, 2004. "On the economics of electricity consumption in small island developing states: a role for renewable energy technologies?," Energy Policy, Elsevier, vol. 32(1), pages 127-140, January.
  6. Claude Crampes and Natalia Fabra, 2005. "The Spanish Electricity Industry: Plus ca change," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 127-154.
  7. Ramos-Real, Francisco Javier, 2005. "Cost functions and the electric utility industry. A contribution to the debate on deregulation," Energy Policy, Elsevier, vol. 33(1), pages 69-87, January.
  8. Barquin, Julian & Bergman, Lars & Crampes, Claude & Glachant, Jean-Michel & Green, Richard & Von Hirschhausen, Christian & Lévêque, François & Stoft, Steven, 2006. "The Acquisition of Endesa by Gas Natural: Why the Antitrust Authorities Are Right to Be Cautious," The Electricity Journal, Elsevier, vol. 19(2), pages 62-68, March.
  9. Weisser, Daniel, 2004. "Power sector reform in small island developing states: what role for renewable energy technologies?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 8(2), pages 101-127, April.
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