An Analysis of the Investment Decisions on the European Electricity Markets, over the 1945-2013 Period

Pascal Da Costa () and Bianka Shoai Tehrani
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Bianka Shoai Tehrani: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec, TECH ECO (ex-ITESE) - Institut Technico-Economie - CEA-DES (ex-DEN) - CEA-Direction des Energies (ex-Direction de l'Energie Nucléaire) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - Université Paris-Saclay

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Abstract: The aim of the article is to understand how the drivers for investment decisions in the capacities of electricity production have evolved over time, from 1945 to the present day, in the specific context of Europe facing wars and conflicts, scientific and technological progress, strong political and academic developments. We study the electric investment decisions by comparing the history of the European electricity markets with the successively dominant economic theories in this field. Therefore, we highlight differences between rational behaviors, such as described by the theories, and actual behaviors of investors and governments. Thus the liberalization of electricity markets in the European Union, more than twenty-five years ago, parts of a rationalization prescribed by new economic theories. It is clear that liberalization is being discussed. First, it remains very heterogeneous, which complicates the goal of creating a large single market for electricity in the Union. Second, we see a recent re-centralization of energy policy in the European Union (EU), which takes the form of a new regulation mainly relating to climate and renewables. However, this re-regulation is different from centralized control experienced by all European electricity markets until the mid-1980s.

Keywords: European Electricity Market; Electricity Investments; European Energy Market Liberalisation; Climatic issues; Renewables.; Renewables (search for similar items in EconPapers)
Date: 2013-12-13
New Economics Papers: this item is included in nep-ene, nep-eur, nep-his and nep-reg
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