FTI Consulting Study Finds European Electricity Market Framework Obsolete and in Need of Major Reform
FTI Intelligence Releases Toward the Target Model 2.0, a Multi-Client Study on Policy Recommendations for a Sustainable EU Power Market Design
The study finds that the current market framework for electricity in
Its publication is timely and significant, following the
Toward the Target Model 2.0 provides a comprehensive assessment of all the issues facing the current European electricity markets, including how to better coordinate investment between networks; centralised and decentralised generation; securing revenues for investors in order to facilitate financing and reduce cost for consumers; the lessons to be learned from hybrid markets in
The six-month study also presents a set of radical ideas for the reform of the European power and carbon markets. These ideas include the following:
Refocusing market reforms toward long-term investment incentives, in addition to the historical emphasis on integrating day ahead markets, which provide short-term price signals to balance the system in real time;
Introducing a carbon price floor at the European-level, in order to provide a long-term bankable carbon price signal and stimulate investment in clean technologies;
Promoting long-term contracts, which support lower cost financing by implementing contracting obligations on suppliers;
- And reinventing coordination in a fragmented value chain by implementing certain planning and coordination mechanisms at the regional and European-level, such as regional renewables development plans consistent with the network development plans.
"The current power markets were designed in the 1990s in a different policy context. A major shift in focus is needed to deliver the investments required," explained
About the Study
The Toward the Target Model 2.0 study is authored by members of the FTI-CL Energy practice, a cross-practice team of energy experts from
About FTI Intelligence
FTI Intelligence is a comprehensive online resource for energy markets news and research. In addition to the energy markets newsletters, FTI Intelligence hosts industry-related news and events, as well as comprehensively researched publications. These data-driven publications, available for purchase on the FTI Intelligence Webstore, will offer in-depth analysis and strategic insight on competitive markets, policy, finance, technology and business models across the energy spectrum for both established and emerging markets.