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European Energy Market Liberalization Case Study

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Updated: Sep 8th, 2020

The economic benefits of liberating the EU energy market amount to increase competition intensity between the market players, and therefore, the customer service quality and price balance optimization (Mastropietro, Rodilla, and Batlle 38).

These advantages are important to consumers. However, they are not the only beneficiaries. Large corporations with considerable financial capacity across Europe are also the winners because they get a chance to purchase their less well-performing competitors from the neighboring European countries. These businesses are the players that stand to gain the most from liberalization. To illustrate, Spanish energy company Endesa was purchased by Italian Enel, and as a result, this player was able to establish its firm positions at the national market of Spain.

The implication of liberalization for energy producers in the EU is the opportunity by the biggest national energy and electricity groups such as EON, Enel, GDF-Suez, and Electricité de France to purchase their less performing competitors and to occupy their national markets (Bouzarovski, Petrova, and Sarlamanov; Talus 15). The environment they face will change post-liberalization by establishing a higher rate of competition, making the task of operating the market in economically-justified way more complex (Talus 86).

To cope with the new conditions of post-liberation, these players will need to occupy an active policy-making position to develop the new regulations eliminating possible problems that might arise in the new conditions (Talus 22). The focus of regulation efforts should be on more powerful energy regulators enabling control of anti-competitive behavior, investment attraction, and facilitating cooperation between different market participants with the objective to create a more favorable economic climate in the industry (Talus 64).

The de-integration of large energy companies is seen as such an important part of any attempt to liberalize the EU energy market because vertically integrated large companies do not have interest in letting other players to the market since they have little interest in allowing other market players using their utility grids to sell energy to end-buyers (Jonsson 48). The EU market cannot be reformatted unless the full benefits of competition become available to all market players through splitting the energy utilities into generation, transmission, and distributing enterprises (Van Hende and Wouters 190).

The ultimate goal of these transformations is to allow the separation of business of companies selling energy and those that produce and transport it to the end-user (Ciambra and Solorio 148). The possibility of establishing the lowest ending prices for energy buyers is thus conditioned by the ability of energy marketing companies to purchase energy from energy-producing companies at the attractive prices and transfer it with the use of utilities of energy transferring companies providing best prices.

I think that progress toward the liberalization of the EU energy market has been fairly slow because of the two major factors. First, the EU energy selling industry baldy lacks regulative policies that forbid utility concentration within one big corporation. As an outcome, energy marketing companies have to play according to the rules of large companies holding the energy transferring grids and energy-producing resources.

In addition, national governments within the EU have to regulate the economic situation at their energy markets because it is a matter of national concern, and violations in this area may lead to considerable problems for any European country. The cause of this problem is the lack of reasonable policies that would eliminate the existing monopolistic threats.

Works Cited

Bouzarovski, Stefan, Saska Petrova, and Robert Sarlamanov. “Energy poverty policies in the EU: A critical perspective.” Energy Policy 49 (2012): 76-82. Print.

Ciambra, Andrea, and Israel Solorio. “The Liberalisation of the Internal Energy Market: Is the EU Dancing at a British Tempo?.” Energy Policy Making in the EU (2015): 147-165. Print.

Jonsson, Daniel. “Energy Security Matters In The EU Energy Roadmap.” Energy Strategy Reviews 6 (2015): 48-56. Print.

Mastropietro, Paolo, Pablo Rodilla, and Carlos Batlle. “National Capacity Mechanisms In The European Internal Energy Market: Opening The Doors To Neighbours.” Energy Policy 82 (2015): 38-47. Print.

Talus, Kim. EU Energy Law And Policy: A Critical Account, Oxford: OUP Oxford, 2013. Print.

Van Hende, Katelijn, and Carmen Wouters. “The Regulation of Microgrids in Liberalized Electricity Markets in the EU and East Asia.” European Networks Law and Regulation Quarterly (ENLR) 2.3 (2014): 190. Print.

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