The European think tank Bruegel presents a detailed, sophisticated analysis of the European Union’s energy policy and the viability of creating a European cross-border electricity transmission system. Underlying this technical and academic study is a major political story about why EU member nations don’t cooperate to create such a historic system. National concerns that have shaped Europe for centuries remain factors in creating a single market for the generation and transmission of electricity within a continental grid. Research fellow Georg Zachmann’s technical expertise and systemic insights make this dense research report and its unifying policy recommendation essential reading for anyone interested in this complex but crucial topic. getAbstract spotlights this report for energy executives, managers, policy makers and investors.
Europe’s Electrical Connection
The European Union’s energy market initiative aims to achieve “security, sustainability and competitiveness.” The international electricity exchanges developed in Europe during the past 100 years have reduced costs and cut the threat of power shortfalls, but the exchanges have failed to generate a pan-European energy policy or network. “Physical and administrative barriers” continue to inhibit cross-border trading in electricity.
Limitations in the present electrical infrastructure led to increased energy prices: Just “the cost of using major cross-border transmission lines increased by more than 10% between 2012 and 2013 to about €1 billion.” A multinational policy aimed at incorporating electrical market segments within EU nations can stem these costs by linking these market segments and eliminating organizational obstacles.
Better interconnectivity, reconfigured power plant fleets, expanded uses of renewable energy sources as well as increased “market integration” over greater distances would lead to efficiency gains. But progress will require political intervention, because electricity suppliers are natural monopolies. What’...
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