Weaknesses in the European Electricity Market

Special Report: Deregulation, State of Affairs
By Jean-Michel Glachant

Based on recent research, this paper examines the implementation of the EU Directive 96/92 on the achievement of the European electricity market. It focuses on three dimensions of national reforms: the institutional framework, the morphology of network infrastructures, and the industrial organisation of the electricity supply industry. The paper argues that the output of national reforms can be explained by long term constraints and by the strategies adopted by actors in response to the new European rules. Based on studies of prices, of third-party access to transmission grids, and shareholder structures, the paper argues that the European electricity supply industry is only weakly integrated. Important differences remain; the industry is still divided in several relatively independant sub-systems. Finally the paper suggests that future integration may result from the strategies of international multi-utility companies.

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