Market Monitoring and Analysis: Electricity Sector

Abstract

EU electricity liberalisation remains an essential energy reform programme, in scale in any other major region of the world. While other regions of the world have seen major pauses to their energy market reforms (most notably in the United States), the EU in the form of the European Commission, continues to press ahead.

 Electricity market power in Albania is in a difficult situation as a consequence of the lack of the adequate home-brew electricity resources and the great dependency from the hydro resources, inadequacy of the interconnections capacity with the neighbouring networks of electricity power, the considerable technical and economic barriers, and the difficult financials.

In countries where no “official†power pool has been set up, different kinds of privates’ entities, e.g. generators, distributors, traders, large consumers, stock exchanges, system operator etc. or a combination of them, have promoted the creation of PX-s. The idea is that because electricity is a homogeneous product, standardized contracts can be traded on organized marketplaces. Since such an initiative was not forbidden by any law or by the European Directives many project have emerged in response to different motivations.

This process in Europe, known as the liberalization process, has had a wide impact on the European electricity industry.

Electricity market liberalisation is the opening of the market to competition; the extension of vertical unbundling of transmission and distribution from the generation and retailing; and the introduction of an independent regulator.

The focus of this project is an analysis of the role of electricity PX-s in the recently liberalized electricity markets of Europe. In the context of creating “a†competitive electricity market at a European level, the key questions considered are the functioning of these PX-s with respect to electricity characteristics, market design and regulatory framework.

 Keywords: Energy,‘Placing on the marketâ€, ‘Eco design’,†Power exchange (PX)â€