Towards the re-foundation of the electricity market regime on long term contracts and vertical arrangements?
Towards the re-foundation of the electricity market regime on long term contracts and vertical arrangements? / Dominique Finon , EU energy policy blog, 22/06/2011
Electricity market regime is at a crossroads. There is a fundamental tension between short term pricing as a signal for investing in the whole generation mix and the long term policy objectives in matter of energy security and carbon emission control. It is due to inherent specific price- and volume-risks inherent to electricity markets for investing in large-sized technologies with large upfront costs and long lead times, like non-fossil technologies, and more generally low carbon equipment. Risk mitigation and risk sharing by long term contracts or vertical integration are needed with even the generalization of these arrangements under the government coordination as it is envisaged by the Electricity Market Reform in the UK…