Review of the Electricity Market Design in the Context of the Energy Union: The Role of Regions

23.02.2017

The Energy Union proposals (along with the more recent Clean Energy Package) place great emphasis on the Internal Electricity Market developing on a regional basis. However, these regions will develop at different speeds and in different ways, based on political considerations, infrastructure, markets and system operations. These different development paths, coupled with the political nature of the issues involved, mean that a single, clear, coherent governance structure is unlikely to emerge.

These are among the key findings of a new report from CERRE. Authored by Professor Nils-Henrik von der Fehr (Oslo), Professor Claude Crampes (Toulouse) and Graeme Steele (CERRE), the report examines the regions aspect of the Energy Union proposals and assesses if a model of regional development is desirable and can be made to work.

The key findings of the report include:

  • That a ‘one size fits all’ approach cannot and should not be followed;
  • The lack of consensus around this highly politicised issue will result in regional development varying significantly on the grounds of infrastructure, market and system operations;
  • In the current climate, there is no realistic prospect of a single, clear governance structure for regions emerging;
  • In the absence of this governance structure, the emerging Regional Security Coordination organisations may provide a focal point for regional cooperation amongst TSOs. However, these organisations may well be superseded by Regional Operational Centres as proposed in the EC’s Clean Energy Package, further complicating the picture;
  • The proposals in the Clean Energy Package are likely to heighten the political nature of the regions question, and the eventual outcome will rest on how much responsibility (e.g. for security of supply aspects) member states will be prepared to pass from national to regional organisations.

 

CERRE Director General, Professor Bruno Liebhaberg, says: “The regional dimension of the Energy Union proposals is becoming ever more important. However, the findings of this new, original CERRE research shows that political considerations – largely related to security of supply – remain a key factor. Indeed the eventual policy outcomes on the regional dimension are in our view likely to be dominated by how these political aspects are resolved.”

Authors: 
Professor Claude Crampes, Professor Nils-Henrik von der Fehr and Graeme Steele
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