Research
Energy markets in the European Union
Within the European Union, a process of liberalisation (and privatisation) is under way in the energy sector. This is not happening at the same speed nor is the starting point the same for different member states. Although the contours of a free European energy market are slowly emerging, much attention and effort is still necessary over the next few years to achieve the free market. What the market will eventually look like in terms of producers, dealers, distributors and distribution networks will only gradually become evident over the course of time, and both the market and regulators will undergo many adaptations.
Further, to achieve the goal of more sustainable energy in Europe, the way in which environmental and security of supply objectives within the liberalised market are met will also be very important. A certain degree of agreement will need to be reached about the European public interest, as will the way in which the member states aspire to safeguarding this interest.
Market liberalisation inevitably involves market regulation and monitoring. During the introductory phase of liberalisation, which is relatively long, the monitoring of national markets must be highly coordinated. Liberalising the energy market in Europe should lead to a greater degree of cross-border trade in gas and electricity, for which the creation of a 'level playing field' is an important condition. Liberalising the cross-border trade in energy trade alone is not enough to create this level playing field, but is a first important step. The national energy markets themselves will also need to be liberalised. The regulators therefore need to play an important part in supervising that process.
Market liberalisation will no doubt lead to a major reshuffling of energy producers. Some will grasp the opportunity to expand within the European market, while others will merge or be taken over by competitors. Logistics will need to be adapted, because the capacity for production, storage and transport will need to meet the new European market conditions. The situation in the US has shown that when investments in distribution networks, pipelines and output potential do not follow suit, this can have major effects on the flexibility of the free market and the security of delivery to consumers. In the coming years, tensions that exist between the market, the environment and security of supply will require major attention from all parties involved in the market and in government.