EU Energy Policy Blog

Few would argue with the claim that Texas has the best wholesale and the most competitive retail electricity market in the US, if not the world. But it suffers from an ailment called inadequate resource adequacy. Private investors, who are the key stakeholders in building generation capacity, appear unable and/or unwilling to invest sufficiently in what the regulators and the market operator would like to see in terms of a comfortable reserve margin.

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This week, the European Climate Commissioner made a proposal to stabilise the European Union’s emission trading system – a market for greenhouse gas emission allowances that has been in place since 2005. Under the proposal, allowances worth six month of EU emissions (900 million tonnes) would be temporarily taken out of the trading system, and sold in 2019 and 2020 rather than 2013-2015.
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With the November’s election around the corner, everything in Washington and beyond is viewed from the highly polarized and politicized perspective with both parties trying to milk the issues for all they can. The recent demise of coal is no exception. Coal, long considered the fuel of choice for power generation in the US – as in many other countries – has been gradually losing market share, mostly to natural gas. The coal’s downward trend, however, has accelerated in the past couple of years with gas prices at historically low levels. Although the figures fluctuate seasonally and depending on temperature and load, in the past few months, power generation from natural gas has been running at near parity with coal, something few observers could have imagined only a decade ago. Continue reading »

What crisis? Nymex and ICE oil price movement shows how oil prices can be moved anywhere as long as its up, except of course when its down, where fundamentals point with stubborn determination.Recent weeks, especially the last show that sometimes the oil bulls can get dispirited and run out of news support, and be forced to take a cut in their boundless optimism which says we really can have $130 a barrel for Brent and $125 for WTI like Goldman Sachs tells us we can – this year, in 2012. When the markets take an especially hard hit, like the recent loss of $10 off the barrel price, the dead cat bounce can take the shape of a Goldman tiger bounce – paper tiger of course.

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Harmonisation in matter of capacity adequacy is not on the 2014 agenda of electricity markets integration. But the Council of European Energy Regulators (CEER), the European Commission and different European bodies of stakeholders have engaged reflections on this issue. A guideline of good practices on generation adequacy and capacity remuneration mechanisms initiated by the CEER is currently in discussion. The DG Energy is partly focusing the redaction of its next October Internal market communication on capacity remuneration mechanisms. Free trading and cross-border contracting on capacity rights are on the top of the list. Continue reading »

Biofuels are a key component of the EU strategy to improve the efficiency in transport, one of the sectors with a larger energy use and carbon emissions in Europe, and for which the European Commission has set very ambitious reduction objectives Continue reading »

Market coupling is one of the key-policies for achieving the EU single electricity market. The EU Commission praises the price-lowering effects of market integration in the first draft of the Internal Market Communication of August 30th: “wholesale electricity prices in the EU have risen much less thanks to competition facilitated by increasing cross-border trading and market integration”. Continue reading »

While politicians are trying to figure out how to get the economy growing again, a growing number of energy efficiency experts are working equally hard to bring energy demand growth to a permanent halt. We are, of course, not talking about the developing world, but the advance economies that use large amounts of energy on a per capita basis, and by some measures, have already reached or may bed approaching demand saturation levels.

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Restricting international trade between Sweden and Denmark – that is the abuse the Swedish network operator Svenska Kraftnät was accused of by the European Commission. By limiting energy exports to Denmark, Svenska Kraftnät relieved internal congestion on its network, as the export restrictions reduced the total amount of energy flows over its network. However, by doing so, Svenska Kraftnät gave consumers in South Sweden the opportunity to buy cheap energy from North Sweden, but not Danish consumers. This was a clear violation of Article 102 of the Treaty, according to the Commission, as Svenska Kraftnät is a dominant firm that might have abused its position by discriminating between customers based on nationality.

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Buildings account for 40% of the total energy consumption of the EU and they are one of the most significant sources of greenhouse gas emissions (36% of the EU total). In order to achieve the 2050 EU building sector target, the energy performance of existing buildings will need to be improved substantially.

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