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#Energy & Sustainability

Review of the electricity market design in the context of the energy union: the role of regions

  • February 23, 2017
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Document(s)
REPORT | Review of the Electricity Market Design in the Context of the Energy Union: The Role of Regions

The Energy Union proposals (along with the more recent Clean Energy Package) place great emphasis on the Internal Electricity Market developing on a regional basis. However, these regions will develop at different speeds and in different ways, based on political considerations, infrastructure, markets and system operations. These different development paths, coupled with the political nature of the issues involved, mean that a single, clear, coherent governance structure is unlikely to emerge.

These are among the key findings of a new CERRE Energy & Climate report. Authored by Professor Nils-Henrik von der Fehr (CERRE & University of Oslo), Professor Claude Crampes (Toulouse School of Economics) and Graeme Steele (CERRE), the report examines the regional aspect of the Energy Union proposals and assesses if a model of regional development is desirable and can be made to work.

The key findings of the report include:

  • That a ‘one size fits all’ approach cannot and should not be followed;
  • The lack of consensus around this highly politicised issue will result in regional development varying significantly on the grounds of infrastructure, market and system operations;
  • In the current climate, there is no realistic prospect of a single, clear governance structure for regions emerging;
  • In the absence of this governance structure, the emerging Regional Security Coordination organisations may provide a focal point for regional cooperation amongst TSOs. However, these organisations may well be superseded by Regional Operational Centres as proposed in the EC’s Clean Energy Package, further complicating the picture;
  • The proposals in the Clean Energy Package are likely to heighten the political nature of the regions question, and the eventual outcome will rest on how much responsibility (e.g. for security of supply aspects) member states will be prepared to pass from national to regional organisations.

CERRE Director General, Professor Bruno Liebhaberg:

“The regional dimension of the Energy Union proposals is becoming ever more important. However, the findings of this new, original CERRE research shows that political considerations – largely related to security of supply – remain a key factor. Indeed the eventual policy outcomes on the regional dimension are in our view likely to be dominated by how these political aspects are resolved.”

Author(s)
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Claude Crampes
Claude Crampes
CERRE Honorary Research Fellow
Toulouse School of Economics

Claude Crampes is a CERRE Honorary Research Fellow. He is Professor emeritus at the Toulouse School of Economics (TSE). He is also a senior researcher at the Institut D’Economie Industrielle (IDEI). Mr Crampes previously served as a member of the economic council of the Electricity Regulatory Commission (1999-2001) and as consultant for the World Bank (1995, 1998, 2005). During his time at IDEI, he was mainly involved in partnerships with Iberdrola (1993-2000) and EDF (since 2001).

His research interests include network  economics, industrial economics and the economics of intellectual property.

In the field of energy conservation, his works have been published in Resource and Energy Economics, The Electricity Journal, Energy Economics, the Journal of Network Industries, The Energy Journal, the Oxford Review of Economic Policy, the International Journal of Industrial Organization and in the Revista Española de Economía. Mr Crampes holds a doctorate in economics from the University of Toulouse in 1975

Claude Crampes is a CERRE Honorary Research Fellow. He is Professor emeritus at the Toulouse School of Economics (TSE). He is also a senior researcher at the Institut D’Economie Industrielle (IDEI). Mr Crampes previously served as a member of the economic council of the Electricity Regulatory Commission (1999-2001) and as consultant for the World Bank (1995, 1998, 2005). During his time at IDEI, he was mainly involved in partnerships with Iberdrola (1993-2000) and EDF (since 2001).

His research interests include network  economics, industrial economics and the economics of intellectual property.

In the field of energy conservation, his works have been published in Resource and Energy Economics, The Electricity Journal, Energy Economics, the Journal of Network Industries, The Energy Journal, the Oxford Review of Economic Policy, the International Journal of Industrial Organization and in the Revista Española de Economía. Mr Crampes holds a doctorate in economics from the University of Toulouse in 1975

Nils Henrik Von Der Fehr (2)
Nils-Henrik von der Fehr
Research Fellow
and University of Oslo

Professor Nils-Henrik M. von der Fehr is Professor of Economics at the University of Oslo. In addition to numerous academic positions, Nils-Henrik has chaired or served as a member of government committees both in his native Norway and internationally; he continues to provide expert advice to private companies and government institutions around the world on energy, as well as other issues. His research interests include microeconomics, industrial economics, regulation and competition policy.

Professor Nils-Henrik M. von der Fehr is Professor of Economics at the University of Oslo. In addition to numerous academic positions, Nils-Henrik has chaired or served as a member of government committees both in his native Norway and internationally; he continues to provide expert advice to private companies and government institutions around the world on energy, as well as other issues. His research interests include microeconomics, industrial economics, regulation and competition policy.

Graeme Steele
Graeme Steele
Founding Chairman of the Board of ENTSO-E (the European Network of Transmission System Operators for Electricity)
Founding Board member of ENTSOG (the European Network of Transmission System Operators for Gas)
Board member of Gas Infrastructure Europe (GIE).

Graeme Steele is a senior executive with thirty years’ experience in the European energy sector across the electricity and gas markets.

Prior to forming GES Energy Consulting Limited in August 2015, he held various senior management roles in National Grid, ranging from developing and operating major interconnector projects, to establishing a Brussels Office, influencing energy market integration and design, leading regulatory tariff reviews, designing transmission network charging systems, and leading the start-up of a telecoms infrastructure business. Graeme was also involved in the privatisation project which split up Great Britain’s energy industry in the early 1990s.

He has been a Director of National Grid Wireless, National Grid Interconnector Holdings, National Grid Interconnectors Ltd, National Grid Belgium and BritNed, the Joint Venture that operates the interconnector between Great Britain and The Netherlands.

He has also held a number of senior executive positions at EU level, namely: founding Chairman of the Board of ENTSO-E (the European Network of Transmission System Operators for Electricity); founding Board member of ENTSOG (the European Network of Transmission System Operators for Gas); and Board member of Gas Infrastructure Europe (GIE).

Graeme Steele is a senior executive with thirty years’ experience in the European energy sector across the electricity and gas markets.

Prior to forming GES Energy Consulting Limited in August 2015, he held various senior management roles in National Grid, ranging from developing and operating major interconnector projects, to establishing a Brussels Office, influencing energy market integration and design, leading regulatory tariff reviews, designing transmission network charging systems, and leading the start-up of a telecoms infrastructure business. Graeme was also involved in the privatisation project which split up Great Britain’s energy industry in the early 1990s.

He has been a Director of National Grid Wireless, National Grid Interconnector Holdings, National Grid Interconnectors Ltd, National Grid Belgium and BritNed, the Joint Venture that operates the interconnector between Great Britain and The Netherlands.

He has also held a number of senior executive positions at EU level, namely: founding Chairman of the Board of ENTSO-E (the European Network of Transmission System Operators for Electricity); founding Board member of ENTSOG (the European Network of Transmission System Operators for Gas); and Board member of Gas Infrastructure Europe (GIE).

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