Our new study about the Energy Union
Energiaklub together with Trinomics and Aether provided an overview and analysis for the European Parliament, at the request of the ITRE Committee, about the EU policies, measures and instruments that contribute to the realisation of fully integrated and well-functioning electricity and gas markets in Europe.
Case studies explore capacity remuneration mechanisms, electricity market coupling, cross-border gas trade between Hungary and its neighbours. Policy recommendations to improve the effectiveness of the integration are formulated based on the key findings.
Key findings of the analysis:
- The integration of electricity and gas markets provides substantial macro-economic benefits, but the regional implementation projects are delayed, mainly due to inadequate governance.
- Diverging national energy policies and market rules are hindering market integration.
- EU legislation is often not implemented in a timely or correct way and non-compliance of national legislation is not rapidly addressed by the European institutions.
- Electricity wholesale prices were increasingly converging since the market coupling, but since 2013 this trend has been negatively impacted by changes in the energy mix, and in particular by the strong development of wind and solar energy in some MSs.
- The way in which electricity markets currently function is not adapted to accommodate the increasing volumes of generation from variable renewable energy sources.
- Some electricity and gas retail markets have become very competitive and dynamic but in most MSs, consumers cannot yet fully benefit from competition amongst suppliers and market based prices.
- Interconnection capacity calculation and allocation mechanisms have substantially improved, but market function was still hindered in some MSs by non-market based allocation mechanisms.
- Interconnection levels have increased for both electricity and gas, but the available capacities are still insufficient to ensure fully integrated electricity and gas markets.
- The EU instruments targeted at co-financing energy infrastructure projects effectively contribute to realising investments, but the framework lacks focus and coherence.
- Available EU energy funding only covers about 5 % of the overall financing needs for transmission grid infrastructure.
- Security of electricity supply is mainly addressed at national level, and non-harmonised capacity remuneration mechanisms (CRMs) are being implemented with the risk of hindering the completion of the internal energy market.