StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Development of European energy market - Essay Example

Cite this document
Summary
This essay is intended to analyze the current position of the energy market and the steps taken by the government for implementing liberalization. The future proposals, which are intended to be implemented, would also be analyzed. European Commission initiated liberalization of energy market…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.1% of users find it useful
Development of European energy market
Read Text Preview

Extract of sample "Development of European energy market"

Development of European energy market The European energy market was highly fragmented and was under the monopoly of different member states until about 1990 (Cameron, 2007). European Commission initiated liberalization of energy market for the benefit of consumers and for development of its economy and this procedure is still underway heading towards a single energy market, which is proposed to reduce price and increase the quality of the service. The present essay is intended to analyse the current position of the energy market and the steps taken by the government for implementing liberalization. The future proposals, which are intended to be implemented, would also be analysed. The process of liberalization of energy and electricity market which started in 1990’s has resulted in the development of an open and competitive market for electricity and now electricity could be transported cross border. Power generation, its trade and supply are opened to competition. However network activities such as lower voltage distribution and high voltage transmission are still regulated by national monopoly. The liberalization started as a result of Electricity Market Directive of 1996. By the year 2000 most of the member states implemented the liberalization package. But some members especially France and Germany did not agree with these policies (Prospects for the internal gas and electricity, 2007). The Directive of 1996 was updated later, in the year 2003. The legislation ensured security of supply, efficient operation of power generation plants, efficient network access, access to storage, and transparency in the dealings of all member countries and thus facilitated a fully open energy market to all member countries. The industrial markets were opened up for competition by July, 2004. By 1st July 2007, all the household users also had access to the open market and both industrial and household customers could select a provider of their own choice in the competitive market. This resulted in price reduction, increase of reliability and better quality service to all customers. Based on the legislation in 2003, national regulatory bodies were set up in each country to oversee the monopolies and European Regulators Group for Electricity and Gas (ERGEG) was set up to give advice to the European Commission to implement liberalization package more effectively (Liberalising the EU energy sector, 2009). European commission conducted an enquiry in the market in January, 2007 to study the nature and effect of open market, and found that the structure of the market is still the same as old monopoly structure. It was dominated by companies which had both power generation as well as its transmission under their hold and therefore could control the prices. They prevented the entry of new companies into the market. This became one of the biggest obstacles for the complete impletion of liberalization package (Talus, 2008). Other major issues in the field, which still needed attention, are large-scale investments to set up more power generation plants and to increase the transmission capacity and the integration of overall electricity system. A third package of proposal for energy sector legislation is presently under discussion and this involves updating of the directives on electricity and gas, regulations of cross border trade of electricity and gas and establishment of a Cooperative Agency for Regulators. The key factors in the proposal, which was published on 19th September 2007, are the following (A competitive market, 2009): 1. According to this proposal in order to ensure better competition the energy production sector has to be separated from the supply section. This would facilitate easy access to the market for competition. The proposal has put forward two options for the companies for this procedure. One is ownership unbundling in which the companies that deal with both power generation and its transmission has to sell part of its assets. This is also called share splitting in which, in the place of an existing single share there would be two different shares for the sectors of power generation and its supply separately. The second option is the appointment of an Independent System Operator. This is for companies that want to retain their assets in power generation and supply. Here Independent System Operator would do the management of these assets and the owners would not have any control over that. The Independent System Operator would be appointed by the Commission and would have powers to intervene in any anti-competitive behaviour from the company. They would have the power of decision in respect of investments in the transmission sector by the network operators. The companies that opt to take this system have to comply with the ten-year investment plan proposed by the national energy regulators (Liberalising the EU energy sector, 2009). 2. It was found that the shortcoming in the consistency of the powers of national regulators is another major obstacle in the development of a full-fledged European energy market. Therefore the third proposal intends to strengthen and harmonize the powers of these regulators so that they can effectively manage companies and even punish them for their anti-competitive behaviour. They would be completely independent of government interventions as well as the interference from the industry. These national regulators of each member countries have to cooperate with each other in all respects for implementing liberalization. 3. It has been found that the present cross border capacity of transmission could not be accessed fully because of the complexity in the rules and administrative procedures at these borders. The works of the Transmission System Operators would be integrated through the establishment of European Network of Transmission system operators and is believed to increase the efficiency of network planning and investments in the sector. They would be provided with separate incentives to avoid nationalistic view in these aspects (Godfried, 2008). 4. Another proposal in the third package is the setting up of a new European Agency (Agency for Coordination Energy Regulators) for involving in cross border transmission cases between the member countries and to settle it amicably with the intention of increase in competition. This energy regulatory framework is highly necessary for the coordination of rules of the different member states so as to facilitate smooth transmission of energy through borders. 5. There is also a clause in the third package, which is intended to protect the competition, and according to this all the companies other than EU companies who would like enter the market also has to undergo the unbundling procedure. Majority of member countries headed by France and Germany were against this unbundling package, however countries like UK, Denmark and Netherlands supported this package. Creation of a single EU electricity market has many challenges to overcome. ERGEG is now heading towards development of regional market in the member countries, the further development of which would result in the integration of these markets to single market. The initiative is to harmonize rules and legislations as well as procedures in different geographical region in such a way that it would lead to single market at least in a large area of EU( A competitive market, 2009). The Union of electricity industry EURELECTRIC is of the opinion that in order to deliver high quality service which produce maximum customer satisfaction, the European Commission has to give thrust to four major factors, They are a strong confidence on the market, development of energy as well as environmental policy that would assist in the process, development of appropriate market regulatory framework and ensuring cooperation from all the related parties (A competitive market, 2009). There should also be integrative dealings and negotiations at the political level (Claes, 2002). Decentralized power generation would result in considerable savings in CO2-emmissions and energy consumption (Joerss et. al., 2003). Five countries such as Germany Luxembourg, Belgium, Netherlands and France at Energy council in Luxembourg signed a Memorandum of Understanding, in June 2007 and this became the milestone for the largest integrated regional energy market in Europe (Single European Electricity Market Agreement Moves Forward, 2007). European Commission believes that development of regional market would act as an intermediate step for further development to a single energy market. For the best performance of this market more concentration has to be given to investments, regulation, market design and security of supply (Jamasb and Pollit, 2005). On 12th January 2009 all the European Union Council ministers agreed to accept and adopt third liberalization package. Thus it could be seen that the liberalization of energy market of Europe, which started in 1990, is still a long way to go to reap its exact benefits. Although the market is opened for competition and the industries and households could have a choice of their provider of power, the structure of the market is almost the same as before mainly because of some companies as well as member states, which do not cooperate with the system. But as a result of continuous negotiation with these companies and other stakeholders the third package proposed to solve the current issues has been agreed upon by all and Europe is heading towards a single energy market with considerable reduction in price and increase in the quality of service. References ‘A competitive market’ (2009) [online] Available at: http://www2.eurelectric.org/Content/Default.asp?PageID=818 (accessed on 3/3/2009) ‘Liberalising the EU energy sector’ (2009). [online] Available at: http://www.euractiv.com/en/energy/liberalising-eu-energy-sector/article-145320 ‘Prospects for the internal gas and electricity’ (2007) Communication from the commission to the council and the european parliament, Commission of the European communities p.1 ‘Single European Electricity Market Agreement Moves Forward’ (2009) [online] Available at: http://petrochemical.ihs.com/news-07Q2/eu-electricity-market-harmonisation.jsp (accessed on 3/3/2009) Cameron, P. (2007) Competition in Energy Markets: Law and Regulation in the European Union Oxford University Press p.475 Claes, D. H. (2002) ‘The Process of Europeanization: Norway and the Internal Energy Market’. Journal of Public Policy 22 (3): 299-323. Godfried, M. (2008) ‘Energy liberalisation deserves adequate oversight’ [online] Available at: http://www.energypolicyblog.com/?p=395 (accessed on 3/3/2009) Jamasb, T. and Pollitt, M. (2005) ‘Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration’. Center for energy environmenyt and Plolicy Reseaerch p.1-15 Joerss, W., Uyterlinde, M., Loeffler, P. and P. E. Morthorst (2003) Decentralised Power Generation in the Liberalised EU Energy Markets, Springer publishers, p.259 Talus, K. (2008) Competition in Energy Markets. Law and Regulation in the European Union. European Journal of International Law 2008 19(4): 878-879. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Development of European energy market Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Development of European energy market Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/politics/1520757-european-energy-market
(Development of European Energy Market Essay Example | Topics and Well Written Essays - 1250 Words)
Development of European Energy Market Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/politics/1520757-european-energy-market.
“Development of European Energy Market Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/politics/1520757-european-energy-market.
  • Cited: 0 times

CHECK THESE SAMPLES OF Development of European energy market

The Single European Market

Single European market Name Institution Date One of the major aims of the European Union was to make the member states economies completely mutual.... This led to the creation of the single market.... The European single market consists of the most determined and broad in scope supply-side program to be launched in the European countries commonly termed as the White paper 1985 (Barnard, 2002, pp.... It may prove to be difficult to complete the single European market due to ineffective implementation, amends and enforcement....
3 Pages (750 words) Essay

European Business Environment

This can be done by having a single european energy market where fair competition is emphasized.... The process began in 1957 through the Treaty of Rome which saw establishment of european Economic Community.... The process began in 1957 through the Treaty of Rome which saw establishment of european Economic Community.... UK: Centre of european Reform.... Name of student: Topic: Lecturer: Date of Presentation: European Single market The European single market was created in 1993 to curb most of the barriers hindering the European community integration....
3 Pages (750 words) Essay

European Union: Issues and Policies

This will lead to more exportation leading to excellent market growth to the Asian countries and in return a major economic growth.... Aims of the Report This report is directed to the European Commissioner to help in the retaining of the European fame in the world market in various faculties mostly in the areas of science and technology.... The first is that India and China have become very powerful in, terms of energy consumption and environmental polluters and the second is the major upgrade in science and technology sectors due to various innovations leading to them producing less sophisticated products that have led to decrease in the market for the European goods (Renard, 2009)....
12 Pages (3000 words) Essay

The European Union and the Transport Policy

The policy was for the development of rail, road and waterway structures.... The main target of the policy was to address the development of the rail system, roads and waterways.... The creation of one market or a single market like the EU needs a well-developed transport industry.... This increased the process of the formation of a single market involving European countries with the inclusion of transport in the act which was signed....
8 Pages (2000 words) Research Paper

Car Industry Development in Europe

This is the essay "Car Industry in Europe to review the present status of car industry in Europe and deals with various aspects of sustainable development of the industry especially in reference to the different environmental aspects.... Introduction: The european is at the forefront of international efforts to combat climate change and must deliver the reductions in greenhouse gas emissions to which it has committed under the Kyoto protocol.... The european commission proposed in January 2007 "The EU pursues in context of international negotiations, the objective of a 30% reduction of GHG emission by developed countries by 2020 (compared to 1990 levels)"....
23 Pages (5750 words) Essay

European Business and Policy Environment

(Georges Markatatos, 8/6/2006)The Impact of Sud Chemie on alternative sources of energyHeadquartered in Munich, Germany, Sud Chemie Group is operational globally and its sound, in-depth acquaintance, knowledge and expertise in the field of conventional and non-conventional energy resources makes it critically important for the company to pioneer efforts on switching over to eco-friendly renewable energy resources.... Sud Chemie's philosophy of sparing use of conventional energy and water give its products advantageous position on reduction of emission levels and thus bring down pollution levels through lower energy consumption and higher efficiency....
6 Pages (1500 words) Essay

Development and Policy in Modern Europe

european and perhaps global economic successes witnessed in the recent several decades not only depend on cooperation of the international community but is also heavily attributed to appropriate economic regimes and policies.... The development status of the contemporary Europe is… In a nutshell, it would be correct to associate the success of economic development witnessed in Europe during the post war period After periods of accumulation of wealth prior to the World War II, only a short period of time during the war was sufficient to send Europe on its knees....
7 Pages (1750 words) Essay

The Energy Outlook Report of France

This paper “The energy Outlook Report of France” gives an overview of energy sources used in France.... The author emphasizes that remarkable economic growth of France occurred due to the energy sector.... hellip; Renewable sources of energy are still in the developmental stages in France and steps are being taken to introduce biofuels in the energy sector.... Hydropower is the major source of renewable energy and policies are being implemented to increase the use of wind, photovoltaic electricity, solar energy for heat and biofuels and geothermal energy....
14 Pages (3500 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us