Table of Contents

Competition, Contracts and Electricity Markets

Competition, Contracts and Electricity Markets

A New Perspective

Loyola de Palacio Series on European Energy Policy

Edited by Jean-Michel Glachant, Dominique Finon and Adrien de Hauteclocque

This book fills a gap in the existing literature by dealing with several issues linked to long-term contracts and the efficiency of electricity markets. These include the impact of long-term contracts and vertical integration on effective competition, generation investment in risky markets, and the challenges for competition policy principles.

Chapter 12: Efficiency, Competition and Long-term Contracts in Electricity Markets: Summary and Conclusions of the Workshop Organized by the GIS LARSEN and the Loyola de Palacio Program of the European University Institute, Florence, 15–16 January 2009

Adrien de Hauteclocque

Subjects: economics and finance, competition policy, energy economics, industrial organisation, law - academic, energy law


Adrien de Hauteclocque The current financial crisis will only slow down the long-term trend of rising world electricity demand but might significantly hamper investment decisions in the short term and lead to a supply crunch once the economy recovers. Overall, $1 trillion a year of investment worldwide would be needed by 2030 to meet consumer needs. The timing of investment decisions is therefore a key aspect, reinforced by the ageing of baseload capacities (essentially coal, fuel, oil and nuclear). The fulfilment of climate policy commitments might also require a massive wave of investment in high fixed-cost technologies such as carbon capture and storage (CCS), nuclear and large-scale renewables units. Investment in the next decade will thus be critical to a low-carbon future in the longer term and long-term supply contracts might be needed to achieve these goals under current investment conditions. The workshop aimed to explore the institutional ways to allow investment in different technologies and make the average prices reach their optimal level in the long term. The workshop, co-organized by the European University Institute and the Laboratoire d’Analyse économique des Réseaux et des Systems Energétique (LARSEN), on the issue of long-term supply contracts in European decentralized electricity markets gathered together 42 experts to discuss current problems and possible solutions under the Chatham House rules. The first session discussed the contribution of long-term 295 GLACHANT PRINT.indd 295 28/04/2011 10:15 296 Competition, contracts and electricity markets supply contracts to the fulfilment of different policy objectives such as...

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