A farewell to alms? Competitiveness and European electricity markets

The European electricity markets have been a huge laboratory for a plethora of energy policies since liberalisation begun in the UK and Norway in the early 1990s. Foremost, subsidy-based energy policies to increase the share of renewables (mostly Western Europe), to battle climate change and in some countries also to decrease the use of nuclear power have been used. On the other hand, at the same time the European Union aims at creating a unified common electricity market with unified energy policy measures. Our study highlights the inherent policy conflict in supporting renewables with subsidies and aiming for a unified competitive electricity market. We will use empirical data from Denmark and Germany, and a numerical example from Sweden to elaborate the breakdown of the market that excess policy interventions have led to. © 2015 Inderscience Enterprises Ltd.