Abstract
Uncertainty in the markets associated with COVID-19 created the need for choosing the optimal model of energy markets. At the current stage of energy markets development, oligopoly tendencies tend to prevail. The article discusses the problem of choosing an effective energy market model, using the example of the electricity market. The competitive energy market of the European Union (finalized with the adoption of the Third Energy Package) was chosen as the basic model, with which the energy markets of the Russian Federation and Azerbaijan are compared. The basic indicators of the EU market were defined and compared with similar indicators for the Russian and Azerbaijani markets. The article explored the main tendencies as well as deadweight losses for Russian and Azerbaijani markets. Recommendations for improving the competitiveness of the markets are developed. The study showed that the level of market competitiveness was directly associated with the economic security of the energy market. The ways of increasing market liberalization in Russia and Azerbaijan were proposed. The proposed gradual liberalization of electricity markets involves the transition from a closed monopolistic to an open competitive electricity market, changing the institutional structure, the search for new and effective mechanisms of interaction between the buyer and seller of electricity. It also creates an opportunity to improve the quality of electricity supply, increase the investment attractiveness of the sector at large, and reduce the cost of electricity.Keywords: degree of competition; electrical power; energy markets; European Union; market model.JEL Classifications: D43, D47DOI: https://doi.org/10.32479/ijeep.11634
Highlights
The economic development of the country is impossible without energy resources, so the supply of quality energy resources becomes a lever of state management and an instrument of geopolitics
At the first stage of the study, the Herfindahl-Hirschman index was determined for Russia and Azerbaijan
The key elements of electricity market reform in both Russia and Azerbaijan are: improvement of the tariff policy and financial discipline, continuation of privatization, development of alternative energy, as well as efficiency and quality of solutions which depend on ensuring the independent status of the market regulator
Summary
The economic development of the country is impossible without energy resources, so the supply of quality energy resources becomes a lever of state management and an instrument of geopolitics. In today’s dominant technological paradigm, the energy sector, based on carbon sources, occupies a key place in the structure of the national, international, and global economic system, despite advancements in green energy. A shortage of certain types of resources is attributed to the variation in energy market policies of different countries. Unequal development of the energy, oil and gas sectors encourages governments and the international community to improve the use of energy resources and invest in promising energy projects. It should be noted that the role of unconventional energy sources is increasing in the global energy balance. Contradictions in the global energy sector are intensified by the fact that the interests of importing, exporting and transit countries may be different
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