The problem, in this case, is that the EU lives in it's own little bubble where it assumes that the member countries and commercial interests act rationally and in the best interest of Europeans.
As such I don't see an issue with an integrated electricity marked, if you at the same time ensure that countries and companies doesn't simply stop investing in energy infrastructure because: We can just buy what we need from someone else.
It's fine to buy cheap wind power and shutdown a power plant if the wind is blowing, but if you only building wind farm and assuming that you can piggy back on the nuclear reactor or dams next door when the wind stops blowing, then it quickly falls appart. Each country, or region, needs to have a plan for self-sufficiency, in all circumstances, but that's not a financially sound idea. Better to have a electricity shortage once in a while, if you only care about money. This is the bit that the EU does not understand. For some reason the EU has always had a blind spot when it comes to the actions companies, and countries, will take in the name of financial gains.
Interconnexions existed before the market, and their development is not purely related to the market. A significant part of grid cooperation through ENTSO-E is about stability, not increased market benefits.
If you will, this is like saying you need an exchange for trade. Well, no, OTC markets exist.
Interconnections sure, but the crisis of 2022 was mostly about cost of gas and other fossil fuels.
The markets made sure that the plants got their costs covered and stayed online.
One can argue whether the last-price-wins is the best market structure but how would you have forced plants to generate at a loss without nationalizing them?
We need some production sites to be operated at a loss, because they have to be maintained the whole year while they may be of use only a few weeks or days per year — but those times we cannot do without them.
No market will ever be able to make that happen, those have ti be publicly owned. Why, oh why on earth would be decide that the benefits should be privatized while the losses have to stay public? Especially when the result of privatization and market policy is that electricity is more expensive for everyone in the end.
It's really not a bold claim. It may seems like so if you chose to believe in the idealized market model but that does not exist in real life.
As for the references, I linked to them (it's in French however) in another comment here.
Also, all of the progress and innovations and building of new generations and renewables and everything until recently has been done without a market, at least in France, which probably has one of the best electricity system in the world.
I wouldn't call electricity (and energy in general) a business. The goal is not to make money but to provide a service. But yes, electricity in France before it was privatized was largely successful. The same could be said for the trains and railways for example. In both cases privatization made the service largely worse than before while prices have been going up and up.
> The markets made sure that the plants got their costs covered and stayed online.
I don't really understand your point here. In an otc trade, costs are also covered, no one works for free.
That being said, my original point was not even about that. It was more about lines in the article that strongly hint that, in the author's opinion, the current issue is politicians not doing enough to force their citizen to swallow the pill. Relevant paragraph:
> Further market integration requires substantial political investment. Governments will need to deal with significant distributional effects within and between countries. Experience has shown that domestic political constraints in this respect are often numerous and difficult to overcome.
> Unavailability of generation due to it being uneconomical to generate has a very direct effect on availability.
Production can't be ramped up significantly in the span of a crisis. In that sense, a different trading scheme wouldn't have made a difference in terms of resource availability during the crisis.
> The electricity market price is downstream dependent on gas market price among others. You want to also remove gas markets then?
Not sure what connection you make between that and my point.
> Anyway, I would gladly hear what would have 2022 looked like had there not been electricity markets.
From an availability PoV, exactly the same. Markets are not responsible for making sure that production is available, or actually used ; that's the role of TSOs.
> Production can't be ramped up significantly in the span of a crisis. In that sense, a different trading scheme wouldn't have made a difference in terms of resource availability during the crisis.
What do those words even mean?
If you are a power plant and your consumables price goes up. If you can't get the price you sell electricity at increased then you will shut down and your generation will be not available to the grid.
> If you can't get the price you sell electricity at increased then you will shut down and your generation will be not available to the grid.
That simply doesn't happen. Whether an exchange is there to "facilitate" trade, or whether Alice in Paris calls bob in Frankfurt to ask how much 2 GWh will cost for the next day, money will change hands, and the plant will work.
And that would be cheaper how? Each of the hundreds of energy retailers going begging each of the thousands or hundreds of thousands of electricity generators?
All the while thinking if only there would be an online service to sort out the best deal .... oh wait
It's the real disease of the EU. There's no problem of failed policy that shouldn't be addressed by deepening the policy and making it harder to back track. The only possible response to problems of complexity is to make the complexity more intractable.
The real shocker for me is that the authors completely ignore the difference between grid integration and market integration. They seem to hold a maximalist line where the market can and should drive planification of the power grid, and where "managerial-governance" can emerge from that abstraction.
