Security of Supply in European Electricity Markets—Determinants of Investment Decisions and the European Energy Union

Saskia Ellenbeck, Andreas Beneking, Andrzej Ceglarz, Peter Schmidt and Antonella Battaglini
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Saskia Ellenbeck: Potsdam Institute for Climate Impact Research (PIK), Research Domain IV—Transdisciplinary Concepts & Methods, Telegrafenberg A31, 14473 Potsdam, Germany
Andreas Beneking: Potsdam Institute for Climate Impact Research (PIK), Research Domain IV—Transdisciplinary Concepts & Methods, Telegrafenberg A31, 14473 Potsdam, Germany
Andrzej Ceglarz: Potsdam Institute for Climate Impact Research (PIK), Research Domain IV—Transdisciplinary Concepts & Methods, Telegrafenberg A31, 14473 Potsdam, Germany
Peter Schmidt: Potsdam Institute for Climate Impact Research (PIK), Research Domain IV—Transdisciplinary Concepts & Methods, Telegrafenberg A31, 14473 Potsdam, Germany
Antonella Battaglini: Potsdam Institute for Climate Impact Research (PIK), Research Domain IV—Transdisciplinary Concepts & Methods, Telegrafenberg A31, 14473 Potsdam, Germany

Energies, 2015, vol. 8, issue 6, 1-19

Abstract: The European Union and its Member States are seeking to decarbonize their energy systems, including the electricity sector and, at the same time, pursue market integration. However, renewable energy (RE) deployment and the liberalization of the energy-only market have raised concerns at the national level about the security of electricity supplies in the future. Some actors consider the lack of sufficient investments in generation capacities a threat to supply security. As a consequence, it was proposed that capacity markets solve these problems. The underlying assumption is that the market design is the only determining factor for investments in security of supply options. In this article, we question this narrow view and identify further determinants of the investment decisions of electricity market participants. Based on the insights of institutional sociology and economics, we understand the market to be a social institution that structures the behavioural expectations of market participants. Derived from the theoretical conceptualization and based on qualitative literature review and own work, we find four determinants for investment behaviour beyond the formal market design: Material opportunities, strategic actor behavior and identity, focusing events and discursive expectations about the future. With this perspective, we discuss the introduction of a European Energy Union as a possible tool that might have a great impact on the more informal determinants such as expectations about the future and the construction of a European energy narrative.

Keywords: electricity market; investments; social institution; European Energy Union; security of supply; capacity markets (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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