The European electricity market over the last 10 years : Which major changes occurred in the electricity markets, in particular in the electricity production of the European Union, in the past 10 years and what are the implications for the future?

Abstract

Electricity forms the backbone of modern society and is vital for powering industries, fostering innovations and guaranteeing the functioning of essential services and technologies. Throughout the last few decades, the usage of electricity has risen exponentially and is forecasted to grow for the foreseeable future. This underscores the need for functioning electricity markets all around the globe. In the European context, electricity markets have been moving towards integration and the ultimate goal is to create a common European electricity market. This thesis aims to investigate the major changes undergone by European electricity markets over the last 10 years and showcase some of the recent events that have had a major impact on the European electricity markets. Consequently, implications for the future of European electricity markets will be discussed. Both a literature review aimed at evaluating shifts in the overall market design and mechanisms as well an analysis showing the changes in price and electricity production over the last 10 years were performed. Our findings suggest that during the analysed timeframe major changes occurred in the type of electricity produced. The introduction of new market mechanisms such as flow-based market coupling and a trend towards decentralization and utilizing IT technologies to leverage data such as the smart grid have changed the face of the European electricity markets. Major increases in electricity prices, further enforced by the current Russian invasion of Ukraine have moved the focus of market actors towards security of supply and affordability. It is likely that these developments will substantially impact the current market design and the way the EU transitions to a carbon-neutral market. Avenues for further research might include: Research that goes further back in time Evaluating the ideal market design for the European electricity market Performing in-depth regression analysis of price coupling between electricity prices and other variables such as gas prices, ETS prices, …