The evolution of the European model for electricity markets

The European target model for electricity markets has been shaped over the past three decades by successive legislations and reforms. The initial focus in the 1990s was on creating an integrated market fostering efficient cross border trade and competition, which delivered significant benefits and is still ongoing via the Network Codes and the Clean Energy Package implementation process. However, changing policy priorities in the 2000s, namely climate change mitigation and security of supply,have creatednew challenges for market integration through a revival of national uncoordinatedpublicinterventions. European electricity markets have therefore in recent years evolved towardsa patchwork of hybrid markets featuring:i) support mechanisms for clean technologies; ii) capacity mechanisms addressing security of supply concerns; and iii) new planning processes to coordinate generation and grid development.The chapter investigates these hybrid markets and the conditions for the emergence of a more structuredand coordinated new target model.