Greater integration of wholesale energy markets in Europe holds enormous potential to benefit consumers in the region. The European Commission and others estimate that the increase in social welfare of fully integrating Europe’s electricity markets could exceed €40 billion annually by 2030.
However, progress toward fully realising these public benefits depends on the outcome of negotiations around the Commission’s Clean Energy for All Europeans (CE4All) package. The legislation represents significant progress toward establishing a more regional or coordinated approach to market and system operation and to regulation. However, amendments proposed by the European Council and the Parliament threaten to weaken the regulatory and operational framework necessary for achieving the full measure of consumer savings.
In this policy brief, authors Philip Baker, Michael Hogan, and Christos Kolokathis highlight the benefits the public stands to gain through regionalisation and outline the paths to achieving them. Most of the savings are anticipated through harmonising wholesale energy prices, with smaller amounts accruing through adopting a more collective approach to resource adequacy and shared balancing.
The authors examine the Commission’s proposals in each of these areas and describe how amendments proposed by the Council and Parliament could undermine progress. They also recommend steps to maximise the consumer and environmental benefits of market integration in the CE4All package negotiations.
In order for Member States to secure the benefits associated with fully integrating Europe’s electricity markets, the Commission’s proposals should be supported in the forthcoming negotiations. Fully integrating Europe’s electricity markets will have overwhelming benefits for consumers, for security of supply, and for achieving energy and climate objectives—with the corresponding progress in regionalising system operation and regulation. The Commission’s proposals are a necessary step in this direction.