2.1 Opening your mind to market opening
Opening your mind to market opening
Let us take a short history lesson about electricity markets in EU. We will discuss more in depth the European Commission's decision to introduce competition into the EU electricity markets, comparing what the market structure was like both before and after and the effects it had on the markets of today.
Wholesale and retail competition
As we saw in the slides, it is possible to have wholesale competition without retail competition. However, for retail competition to properly work, you also need competition on wholesale level. Whether or not a country chooses to introduce retail competition results in different characteristics for the market design, some of which are listed in the table below. Can you think of any others?
When comparing the two markets and whether or not to incorporate retail competition into the model, it is clear that the choice of model depends greatly on the circumstances. The European Commission elected for using the retail market in Europe, and thus also incorporates the wholesale model. In fact, the majority of EU Regulations are effective on wholesale level as well as within retail competition.
