INTERNAL ENERGY MARKET
Completing the Internal Energy Market In February 2011 the EU Heads of State declared the need to complete the
internal energy market by 2014. In order to achieve this, the Commission saw several actions including:
• Implementing internal market law and enforcing competition rules. Even 20 months after the transposition deadline of March 2011, some Member
States have not yet fully transposed the third energy market package. The Commission will continue pursuing infringement procedures to make sure relevant European rules are correctly implemented. Competition rules are to be enforced vigorously to ensure a level playing field for all market players.
• Empowering consumers. Studies show that only one out of three consumers is comparing service offers. It is estimated that EU consumers
could save up to EUR 13 billion a year if they switch to the cheapest electricity tariff available. The Commission will ensure that consumer rights enshrined in the EU legislation will be visible in national law and properly respected by all market players. This includes the right to switch from one supplier to the other in three weeks without any financial costs. The Commission will also promote the roll-out of smart metering systems as this will allow consumers to manage their consumption in real time and better control their energy bills. Special focus will be given to the protection of vulnerable consumers. In addition, the EU Retail Energy Markets Transparency Report provides recommendations for clear presentation of prices, tariffs and offers. Currently only 9 Member States (Austria, Czech Republic, Germany, Finland, Luxembourg, Netherlands, Slovenia, Sweden, and UK) do not have regulated retail energy prices in place. Prices set by state intervention do not provide consumers with the best deal. They risk giving a false impression of protection that de-incentivizes them from actively exploring better options, including energy efficiency services. Furthermore, regulated end-user prices impede investments. They keep companies from entering the market and from investing in new generation. Prices regulated below costs lead to debts which ultimately fall back to taxpayers.
• Ensuring flexible market design. Some Member States are planning to support electricity producers for keeping their available generation
capacity to ensure there is sufficient capacity also when variable sources of electricity, such as wind and solar power, are not producing – called capacity mechanism. However, prematurely introduced and badly designed capacity mechanisms may result in the fragmentation of the internal market and hinder investments. Before introducing such mechanisms Member States should analyse whether there is a lack of investment in generation and why. Before Member States intervene in the market on a national basis, cross-border solutions should be considered. Usually, European solutions are more cost effective. In addition, the Commission will propose guidelines on support schemes for renewables that will enhance the effectiveness of the internal market.
surely be reluctant to invest in this environment, thereby causing a retrograde effect on wider harmonisation. An example would be the trading of guarantees
of origin (products that certify the origin of power) mostly used to certify green energy. For example, this is something that has been developed at a European level by EEX and its subsidiary EPEX SPOT, who will offer these in early 2013. However,
36 December 2012
there still remains the question of whether generators and producers of green energy on a national level are actually allowed to take part in that market, where for instance, generators under German EEG law are not. This poses a diametrically opposing effect which further combats the goal of integration. The more intervention there is from national authorities, the more uncertainty it creates for investors, which leads to more reluctance to invest. By becoming more European, we will strengthen the market, increase efficiency and promote investment at the same time. Clearly, there is a European answer to how investments can be promoted and how the market can be developed further. However, will national legislation allow it? The exchanges have a critical role to play
in all of this. They are Europe’s largest and most important forum for the exchange of prices, information and energy trading. A good example is that of EPEX SPOT – headquartered in Paris, with an office in Leipzig – operating the power markets at the heart of Europe, in Germany, Austria, Switzerland and France.
The more intervention there is from national authorities, the more uncertainty it creates for investors
As such, products and other initiatives
developed by EEX and other exchanges, need to reflect a European market perspective. For example, in Germany, the Energiewende and nuclear moratorium can only be achieved in a European context. By providing flexibility, the market is helping Germany to achieve its goals of phasing-out nuclear power and allowing generators and suppliers to adapt quickly to changes in law. Without the European marketplace, this would have been much more challenging and costly. It is therefore
essential that the internal markets function effectively and that market coupling continues to develop. We know that Member States’ energy
infrastructure investment represents an important part of European integration in the market. Cross border grid expenditure is usually very well harmonised owing to the fact that such projects require both parties to work closely anyway. As
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