Abstract
In this review paper, we select four important waves of new entrants that knocked on the door of European electricity markets to illustrate how market rules need to be continuously adapted to allow new entrants to come in and push innovation forward. The new entrants that we selected are utilities venturing into neighbouring markets after establishing a strong position in their home market, utility-scale renewables project developers, asset-light software companies aggregating smaller consumers and producers, and different types of communities. We show that well-intentioned rules designed for certain types of market participants can (unintentionally) become obstacles for new entrants. We conclude that the evolution of market rules illustrates the importance of dynamic regulation. At the start of the liberalisation process the view was that we would deregulate or re-regulate the sector after which the role of regulators could be reduced. However, their role has only increased. New players tend to improve the sustainability of the electricity sector in environmental, social, or economic terms but might also present new risks that require intervention by regulators.
Highlights
Introduction into European Electricity MarketsThe liberalisation of the electricity sector officially began at the European Union (EU)level with the first legislative Energy Package in 1996
Bulk unavailability, e.g., one Cycle Gas Turbines (CCGT) unit with 30 MW unavailable for four hours, faces significantly lower penalties than smaller unavailabilities that are evenly spread across a longer period, e.g., an aggregator with 1 MW unavailable for 120 h [56,57] The reason behind this difference is that the penalty is a function of the amount of time periods a Balancing Service Provider (BSP) was not fully available, independent of the precise magnitude of the unavailability
Maintaining competitive markets requires that the incentives for new entrants are correct
Summary
We divide this section into three parts. We describe the context and the need to integrate wholesale electricity markets across borders. We discuss, in some detail, how electricity markets were gradually integrated. We take stock of what has been achieved and look to the future
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