Understanding electricity markets in the EU

The European electricity system is undergoing big changes at present. The transition towards a low-carbon economy means a growing role for renewable energy sources, greater energy efficiency and the electrification of transport and other sectors. It also involves giving consumers a more meaningful role, allowing them to manage their demand actively, produce electricity for self-consumption and feed the excess into the grid. In this context, electricity markets, regulations and technical infrastructures need to be adapted to a world in which large utilities no longer dominate the market. Furthermore, markets need to be redesigned in such a way as to encourage investment in low-carbon technologies, while at the same time safeguarding security of supply and keeping costs for households and industry under control.

This briefing gives an overview of the functioning of the electricity grids and the main features of the EU electricity markets. It aims to provide background information for the ongoing debate about a new electricity market design, which the European Commission is expected to propose by the end of 2016. A European Parliament resolution of September 2016 gives a clear position on various aspects of this design.

Author: Gregor Erbach

ESO: Background information: Electricity 'Prosumers' http://www.europeansources.info/record/electricity-prosumers/

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