The Liberalisation of the Continental European Electricity Market - Lessons Learned

Abstract

The liberalisation of the electricity market in Continental Europe started in the late 1990's and is still ongoing. In this paper, past developments in this market are analysed and conditions necessary to enhance competition in this market in the long run are derived. Our major conclusion is that at a minimum, the following conditions would be necessary to bring about effective competition in the long run: (i) complete ownership separation of the transmission grid from generation and supply in all countries and sub-markets; (ii) adequate capacity margin in generation; and (iii ) a sufficiently large number of generators sharing this capacity. As it is not likely that these conditions will be fulfilled , the prospects for a vibrant competition in Continental Europe are doubtful.