Electricity market

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Theme: Electricity markets. A look at the pros and cons of the theme’s sub-areas. of europe’s electricity markets Merja Paavola Janne Harju legislation implementation has been slow Integration of European electricity markets has been slow. Member countries have delayed implementation of the legislation, and that is why the benefits of the internal market has not been achieved in full. harmonised energy policy not in sight There is a clear legislative framework in th EU, but there is no common energy policy. Member countries develop national energy policies from their respective national starting points. Examples of this include the different national subsidy and tax regimes, which might be in conflict with the jointly agreed principles. Sufficient transmission capacity needed to achieve benefits The markets cannot function optimally unless electricity can be transmitted from one area or country to another because of insufficient electricity transmission capacity. This also significantly weakens the security of energy supply. The EU Commission has estimated that the investments needed for transmission and distribution networks in Europe will be up to EUR 600 billion by 2020. Complex permitting processes slow infrastructure investments Complex permitting processes and negative public opinion slow the realisation of electricity generation and transmission investments. The issue is addressed e.g. in the new Government’s Programme in Finland. Competition for subsidies distorts market functionality Member countries subsidise renewable energy production in different ways. Different systems easily lead to subsidy competition between countries if production is transferred from one country to another in pursuit of higher subsidies. It has been estimated that a common green certificate system in the Nordic countries could save EUR 1 billion a year. Fortum forAgendA 9

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