Since the adoption of the Third Internal Energy Market Package, wholesale markets are increasingly characterised by fair and open competition, and – though still insufficient – competition is also taking root at the retail level. As a result of increased interconnection and closer cooperation between electricity players across borders (e.g. in so-called “market coupling” or with “flow-based” capacity allocation), electricity can more efficiently be traded across Europe.

Electricity generated from renewable sources has become one of the most important sources of electricity, heralding a transition towards a low-carbon energy system.

The move away from generation in large central power plants towards de-central production from renewable energy sources requires an adaptation of the current rules of electricity trading and changes the existing market roles.

The electricity market needs to adapt to this new reality; it needs to fully integrate all market players – including flexible demand, energy service providers and renewables. The new market design should ensure that energy markets can fully support this transition at minimum cost.

This will mean developing a new framework which delivers market arrangements: suitable for an interconnected EU-wide electricity market providing clear price signals for new investments and facilitating the further development of renewables, to promote regional cooperation and coordination on energy policies, to enable cooperation on development of renewables, including on support schemes, to safeguard appropriate governance and regulatory framework as well as to provide a truly European dimension to security of electricity supply. More: ec.europa.eu