Reforming the EU internal electricity market will not suffice to deliver EU aims

Abstract

We need to wonder if a reform of the EU internal electricity market would suffice to deliver EU energy security, decarbonization, and electrification. Regrettably, this is not the case. Let us be frank: this market reform, this entry into an era of ‘hybrid electricity markets’, is a condition for success but only a necessary condition, not a sufficient one. Why? Let us consider four other conditions for success to make this point clearer. Decarbonization and electrification face (1) other direct constraints, such as adequacy of grids and infrastructure; (2) indirect constraints, such as the allocation of decision rights between the EU level and the member states; and other types of constraints, both external and internal to the energy field, such as (3) the EU Central Bank monetary policy and member states’ public budget financing and (4) existing international trading and manufacturing chains. It is therefore equally true to say that the existing EU market reform does not change all the fundamentals in the European energy policy, and that the EU energy landscape, post market reform, will require more effort, more attention, and more coordination from public and private energy decision-makers.