The integration of the European electricity markets at a turning point: from the regional model to the Third Legislative Package

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dc.contributor.author SQUICCIARINI, Giuseppina
dc.contributor.author CERVIGNI, Guido
dc.contributor.author PEREKHODTSEV, Dmitri
dc.contributor.author POLETTI, Clara
dc.date.accessioned 2010-07-09T13:41:52Z
dc.date.available 2010-07-09T13:41:52Z
dc.date.issued 2010
dc.identifier.issn 1028-3625
dc.identifier.uri http://hdl.handle.net/1814/14294
dc.description.abstract In this paper we discuss the EU policy on electricity markets integration by reviewing the experience of the Electricity Regional Initiatives. The regional approach to market integration delivered important results in areas such as coordination among national transmission system operators, implementation of market-based mechanisms for cross-border transmission capacity allocation and transparency. Furthermore, the inclusive governance process lead by ERGEG gave voice to all relevant stakeholders. However, there are indications that the regional model reached its limit when faced with the objective of coordinating day-ahead and real-time markets. The unanimity approach at the regional level made the intra-regional decision-making process extremely slow. Further, inter-regional integration issues have not been solved yet and attempts to tackle them by prioritising projects in some Regions weakened the pluralistic attributes of the regional model. The Third Legislative Energy Package has the potential to overcome some of these shortcomings by empowering pan-European institutions (ENTSO and ACER) and by involving Member States in the decision making process. Some weaknesses of the second-package, though, persist in the new framework. First, there are no provisions ensuring that ENTSO will have appropriate incentives to act in the interest of European consumers. Second, the Third Package perpetuates the separation between within-country congestion management – which remains a national issue – and cross-border congestion management – to be dealt with at the EU level. This two-tier approach is inconsistent with the highly meshed nature of the European network and is likely to result in inefficient market design. Further, the implementation of coordinated cross-border and national congestion management mechanisms requires considering geographically differentiated prices within countries, a politically unattractive result for most Member States. en
dc.language.iso en en
dc.relation.ispartofseries EUI RSCAS en
dc.relation.ispartofseries 2010/56 en
dc.relation.ispartofseries Florence School of Regulation
dc.subject European electricity markets integration en
dc.subject cross border trading en
dc.subject market design en
dc.subject L4 en
dc.subject L5 en
dc.subject L94 en
dc.title The integration of the European electricity markets at a turning point: from the regional model to the Third Legislative Package en
dc.type Working Paper en
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