Recommendations for a future-proof electricity market design in Europe in light of the 2021-23 energy crisis

Michael Pollitt, Nils-Henrik von der Fehr, Bert Willems, Catherine Banet, Chloé Le Coq and Chi Kong Chyong

Energy Policy, 2024, vol. 188, issue C

Abstract: In this paper, we discuss electricity market design in Europe in light of the 2021-23 energy crisis, drawing on several of our Centre on Regulation in Europe (CERRE) reports. We outline the relevant theoretical background with respect to wholesale electricity markets, retail electricity markets, excess profits regulation, renewables support schemes and emergency interventions. We next outline the responses of the European Union, France, Norway, the Netherlands and Great Britain to the crisis. This allows us to make a number of recommendations about the future design of the electricity market in the light of theory and recent experience. These include a role for long-term contracts, the extension of the single market, the place for increased price granularity, appropriate energy taxation and the necessity of better monitoring of National Energy and Climate Plans to ensure adequate aggregate investment.

Keywords: Electricity market design; Energy crisis; Retail electricity; Wholesale electricity (search for similar items in EconPapers)
JEL-codes: K32 L50 L94 Q48 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:188:y:2024:i:c:s0301421524000715

DOI: 10.1016/j.enpol.2024.114051

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