Abstract
The scope of the present investigation is to provide a description of final electricity prices development in the context of deregulated electricity markets in EU28, up to 2020. We introduce a new methodology to predict long-term electricity market prices consisting of two parts: (1) a self-developed form of Porter’s five forces analysis (PFFA) determining that electricity markets are characterized by a fairly steady price increase. Dominant driving factors come out to be: (i) uncertainty of future electricity prices; (ii) regulatory complexity; and (iii) generation overcapacities. Similar conclusions derive from (2) a self-developed form of multiple-criteria decision analysis (MCDA). In this case, we find that the electricity market particularly depends on (i) market liberalization and (ii) the European Union (EU)’s economy growth. The applied methodologies provide a novel contribution in forecasting electricity price trends, by analyzing the sentiments, expectations, and knowledge of industry experts, through an assessment of factors influencing the market price and goals of key market participants. An extensive survey was conducted, interviewing experts all over Europe showed that the electricity market is subject to a future slight price increase.
Highlights
The end of 2016 marked the 20th anniversary of the first regulatory directive aimed at liberalizing the European Union’s (EU’s) electricity markets
We find that the electricity market depends on (i) market liberalization and (ii) the European Union (EU)’s economy growth
In the attempt to tackle the important issue of energy planning in the medium to long term, we propose a methodology allowing the exploratory analysis of the forces affecting the future electricity price in Europe
Summary
The end of 2016 marked the 20th anniversary of the first regulatory directive aimed at liberalizing the European Union’s (EU’s) electricity markets. Liberalization of national electricity markets was followed in parallel by efforts to integrate these markets into a pan-European network, aiming to strengthen the security of supply, improve technical capabilities for network management, and increase pricing transparency and efficiency in both wholesale and retail markets [1,2,3,4,5,6,7,8,9]. Traditional generators might be concerned with the high marginal costs of their plants due to fuel price increase compared to new entrants based on renewable sources, which are less affected by non-renewable resource prices. Market prices are important for policy makers to balance acceptable costs for consumers and for the fulfillment of environmental policy goals
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