EU Energy Policy Blog

For decades energy regulators have focused on means to facilitate access to energy supply in order to meet demand and reduce costs. The emphasis has mainly been on liberalisation and removal of market barriers. However, climate change has emphasised that the balance between energy demand and supply is threatened by another risk: excessively high energy demand brings about significantly negative environmental and economic impacts. This is because if a vast number of users is consuming electricity at the same time, energy suppliers have to activate dirty old power plants with higher greenhouse gas emissions and higher system costs.
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Demand Side Response incentive mechanisms are destined to play an important role in the low-carbon future, where electricity peaks increase because of higher levels of energy service demand met through electricity.

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The development of organised markets for electricity and gas requires a high degree of transparency and in turn it helps in providing it. Yet the virtuous circle does not happen spontaneously. Then a satisfactory degree of transparency should be a policy goal of the authorities in charge of the markets. Continue reading »