EU Energy Policy Blog

As power engineers and economists have known for a long-time, the transmission grid is essential to the operation of well-functioning electric power markets. Yet, grid expansion in several regions has been nil or slow. By reviewing the main prescriptions from academic literature and comparing them with case studies from over 16 jurisdictions we find that unless the governance structure is appropriate and specific incentives are provided, grid expansion proves elusive.
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Energy policy is rich in emotion and diverse political and economic interests. Thus the journey towards establishing and implementing an integrated European energy policy has been and still is a cumbersome one. To make the trip for the future more exciting we have developed four storylines: l’Europe des patries, Fortress Europe, Confident Europe and Competitive Europe. The main conclusion to be drawn is that the issue for the EU is not energy resources per se, but rather access to them.
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What does mean security of supply and what are the most important issues? Here is the podcast of the keynote speech I delivered at the last CESSA conference (Cambridge, 14-15 December 2007). Continue reading »

On both sides of the Atlantic, foreign policy analysts have convinced policy makers that the West faces a severe energy security challenge. They promote either ‘energy independence’ or a ‘strategic approach’ to energy security. The West, they say, should stop being naïve about markets. Exporters are renationalising the energy industries and placing their energy assets at the heart of their foreign policy. Large new importers secure their supply through government-to-government deals. Energy policy has become high politics and energy security is hard security. The appropriate institution to deal with these concerns is no longer the International Energy Agency but NATO. It is time to challenge this vision. Continue reading »

Nuclear power has high capital costs and low variable costs, so that its commercial viability depends critically on the cost of capital – the rate of return it must pay investors – and the price of electricity. Pessimists have claimed that liberalised markets are too risky for new nuclear investment without special support. But is it necessarily correct that nuclear power is a risky and therefore financially costly choice? Continue reading »

How expectations change. One year ago, talking about $100 oil was pure speculation. But as we reach the milestone, many are talking about why it won’t stop at $100. The fundamentals point in that direction. Continue reading »

Rising energy prices and mounting concerns about environmental depletion have animated fears that the world may be headed for a spate of ‘resource wars’ – hot conflicts trigerred by a struggle to grab valuable recources. Continue reading »

Competitiveness concerns are high on the Bali negotiations. The European Union has put on the table an ambitious agenda committing to reduce emissions by 20 percent (with respect to 1990 levels), increase energy efficiency by 20 percent and increase the share of renewables in energy consumption to 20 percent by 2020. This agenda may however be in conflict with the low carbon competitiveness of EU exports. Continue reading »

The Commission has recently proposed, within the framework of the Third Energy Package, the establishment of an Agency for the cooperation of energy regulators (ACER) to advise the Commission, facilitate national regulators to cooperate and adopt individual decisions on cross-border issues. Here are some proposals to make the Agency more independent and efficient. Continue reading »

Virtual power plants are one of the measures implemented by the EU to encourage competition in the energy sector. They were first implemented in France to allow outsiders access to the national market while still allowing the EDF to operate nuclear power stations. What has happened to those who purchased power through the French VPPs? Are they making a profit too or has winner’s curse struck again? Continue reading »