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Competition in European Electricity Markets

Competition in European Electricity Markets

A Cross-country Comparison

Edited by Jean-Michael Glachant and Dominique Finon

This book focuses on the diversity of electricity reforms in Western Europe, drawing evidence from ten European Union memberstates plus Norway and Switzerland as associate members. The contributors analyse the various ways of introducing competition in the European electricity industries, and consider both the strategies of electricity companies and their behaviour in electricity marketplaces. They also offer an explanation of the differences of reforms by the institutions and the industrial structures of each country which shape the types of marketrules, industrial restructuring and public service regulations which have been adopted.

Chapter 5: The Deregulated Electricity Markets in Norway and Sweden: A Tentative Assessment

Eirik S. Amundsen and Lars Bergman

Subjects: economics and finance, competition policy, energy economics, industrial organisation


Eirik S. Amundsen and Lars Bergman INTRODUCTION1 In February 1999 the EU electricity market directive became effective. This was a major step towards a single market for electricity in Europe, and implied significant changes in electricity market institutions in most EU member states (Bergman et al., 1999). However, already at the beginning of the 1990s major electricity market reforms were implemented in the UK (England and Wales) and Norway. Furthermore, in 1996, a similar reform was implemented in Sweden and since then, there is an integrated Norwegian-Swedish2 electricity market. The common thrust of this process is that national electricity markets that historically have been subject to detailed regulation are being transformed to markets where prices are determined by the interplay of supply and demand, and where competition and international trade are key features. In spite of these basic common elements, however, competitive electricity markets can be designed in many different ways. This is illustrated by the significant institutional differences between the former electricity market in England and Wales and the Norwegian-Swedish electricity market. There are also some important differences between Norway and Sweden with respect to electricity market design. The purpose of this paper is to briefly describe the design and functioning of the Norwegian–Swedish, in the following called the ‘Nordic’, electricity market, and to make a preliminary evaluation of the experiences accumulated so far. Needless to say the design and organization of a competitive electricity market can be discussed from many...

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