Several successive packages have been needed to get all EU countries to implement compatible market arrangements. The fourth reason is that the various national arrangements between industry players and public authorities cannot readily be merged into a common scheme of interoperable markets.
Energy markets and responsive grids generator#
New communications technologies have given us the tools to register every move of electricity generators and consumers alike – so permitting one generator and one consumer to trade bilaterally inside a market. In truth, it has been the communications revolution that has opened the way to new market arrangements in the electricity industry, and made them feasible. Electricity is, after all, no more than a coordinated flow of electrons jumping from one atom to the other inside the millions of metallic wires of a gigantic interconnected network.” “Electricity is a difficult product to trade as it requires hundreds of technical, legal and economical rules and standards to be agreed before it becomes tradable. This very demanding market arrangement meant that electricity was for decades considered to be a typical “anti-market” product that was best suited to monopolies and even cartels. Electricity is, after all, no more than a coordinated flow of electrons jumping from one atom to the other inside the millions of metallic wires of a gigantic interconnected network. Third, electricity is a difficult product to trade as it requires hundreds of technical, legal and economical rules and standards to be agreed before it becomes tradable. The second reason was that there was no wave of technological innovation – unlike in the case of telecoms – to challenge the incumbent energy giants. The project aimed to open up national monopolies’ territories to foreigners, and that of course was widely seen as a radical project that inevitably triggered opposition. Let’s turn first to all the good reasons for the EU’s slowness. The U.S., Canada, Brazil, Russia, India or China have none of them succeeded in opening up a continent-wide electricity market. But we should remember that no other “federal-style” government of a major country has achieved an internal market for electricity. Taking a quarter-century to build Europe’s internal market in electricity may seem an incredibly long journey as well as an example of the EU’s inability to accomplish serious industry reforms. The paper’s second part – “All done by 2015?” – asks whether this whole construction is robust enough, while the third part “Done forever? From 2015 to 2030” will suggest that the EU’s internal electricity market may yet be seriously challenged by two waves of disruptive innovations – renewables and the “smartening” of the energy system. But there’s no denying that today we are entering the last mile of this slow process, even if anti-market arrangements still prevail in many countries.
There are many “good reasons” why Europe has been so slow, and they are set out in the first part of this paper, entitled “Not easy to do … 1990-2015”. According to the Single European Act strategy of Commission President Jacques Delors, it should have been implemented back in 1992… but that turned out to be only the first stirrings of a 25-year process. It took us a while to build an EU internal market for electricity. Jean-Michel Glachant, Director of the European University Institute’s Florence School of Regulation where he holds the Loyola de Palacio Chair, nevertheless warns that renewable energy and a “smarter” grid remain challenges to its further development.
It is still far from perfect and has been painfully slow in taking shape, but an EU-wide power market has now emerged.
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