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THE STATE OF THE EUROPEAN UNION
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fields. Hence, it would ensure the participation
of the national parliaments in the further inte-
gration process. At a technical level, reporting
obligations should not be seen as a mere ad-
ministrative act, but should include real impact
assessments of national energy policies. Their
impacts should be identified in regard to their
positive or negative effects on neighbouring
countries. This should not prevent member
states from pursuing their own energy policies,
but it should at the same time ensure the re-
gional or European consequences can be identi-
fied and discussed, at both technical and politi-
cal level.
Market design
Similarly, when it comes to market design, the
Commission’s proposals do not seem to recog-
nise that the world has fundamentally changed
since the internal energy market was first con-
ceived in the 1990s. Moving away from a sys-
tem mainly based on already amortised, central-
ised, fossil fuel power plants with mainly variable
costs to a system requiring new investments in
capital intensive renewable investments and
flexibility requires new instruments and support
structures (e.g. demand-side response, storage
and back-up plants). Although the large major-
ity of new investments in electricity generation
or flexibility means Europe now benefits from
regulatory support one way or another (through
renewable support schemes, capacity mecha-
nisms or both), the Commission seems to over-
look this key trend, and only proposes marginal
improvements of the current market design.
There was no proper diagnosis of why the mar-
ket design from the 1990s could be fundamen-
tally unfit for today’s challenges. In other words,
the Commission is trying to make renewables fit
into the old market design, rather than to re-
new the market design for a future based on
renewables.
The current market is in a dilemma situation,
increasing shares of decentralised volatile re-
newable energy in some regions meet overca-
pacities in conventional, fossil base load power
generation across the Union (partly inefficient
and carbon intensive) in a market that does not
trigger adequate long-term investments (“miss-
ing money problem”). On the background of
the overall policy goal of decarbonisation at the
EU level the internal market integration by itself
is unlikely able to deliver the formulated policy
outcome without improved coordination and
streamlining of national energy mixes.
A closer coordination of national energy
policies and planning stipulates the creation of
publicly controlled (or regulated, such as the
TSOs or a regional subsidiary of several TSOs)
contracting entities at regional level. Such enti-
ties would allow investments in renewables,
storage, demand-side response and back-up
facilities to happen by providing investors with
sufficient certainty through long-term contracts,
while ensuring competition between them. This
new market design would not replace short-
term markets, which could still provide the ap-
propriate incentives for operational decisions
and dispatch, but it would replace the uncoor-
dinated (and thus costly) national renewable
support schemes and capacity mechanisms.
Funding innovation and technology at
European level
In a rapidly changing energy sector, innovation
is the key. The energy system of the future will
be based on smart grids, it will take advantage
of storage facilities and electric vehicles, and