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Centre for Energy Economics Research

Faculteit Economie en Bedrijfskunde
Centre for Energy Economics Research
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Succesful energy transition requires international electricity market

Datum:29 april 2017

The realization of energy transition is a socially important, but costly, exercise. To keep the costs of this transition to a minimum, it is important to uphold the basic principles of the organization of the electricity market. These are conclusions drawn by Machiel Mulder, professor of Regulation of Energy Markets at the University of Groningen, on the basis of research on the effects of sustainable energy on electricity market forces. The research was funded by the Netherlands Organisation for Scientific Research (NWO), EnergieNederland, TenneT, NetbeheerNederland, VEMW and the Dutch consumer association (de Consumentenbond), with support from the Authority for Consumers & Markets (ACM) and Statkraft.

The Netherlands has undertaken to increase the proportion of renewable energy in its total electricity consumption from the current 15% to approximately 60% by 2030. Cost management is crucial if this highly ambitious goal is to be achieved. According to Mulder, it is essential to embrace the principles of electricity market forces. ‘The electricity market has evolved into its current form over the past 20 years and seems to be functioning well: more competition, lower prices, innovation in the consumer market and sufficient investment have all led to a reliable electricity supply. The electricity market has become increasingly international, resulting in lower generation costs, more competition and greater supply security.’

In his book, Mulder discusses these basic principles and the extent to which they must be adjusted because of the energy transition. The topics discussed include the wholesale market pricing, investments in power stations, the way in which the network operators keep the electricity network in balance, the opportunities which supllier have to increase consumer involvement in the electricity market, citizens' desire for setting up local energy cooperatives, the increase in the degree to which the electricity markets in different countries are interconnected and the relationshi with the European Union's emissions-trading system. 

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