The Role of Competition in the Construction of the EU Internal Energy Market From the Prism of the Power Exchange

Abstract

Power Exchanges (PX) have been at the cornerstone of the liberalisation of the wholesale electricity market in the 1990s and then of the integration of the single internal electricity market in the EU via so called ‘market coupling’ initiatives. However, competition between PXs struggled to rise for various reasons that will be addressed in this paper. A new EU regulation has recently put PXs at the core of the market integration and is paving the way to a new era of liberalisation to achieve effective competition between PXs. In order to assess the benefits brought by competitive PXs to the Internal Energy Market, one will have to wait that the regulation on Capacity Allocation and Congestion Management (CACM Regulation) and competition is fully effective EU-wide. Until now, the pace of implementation has been uneven throughout Europe. In particular, the coexistence of monopoly NEMOs and competitive NEMOs, and the delay in the implementation of competition in some regions, create competitive disadvantages for new entrants.