This document summarizes the key legislation, initiatives, current state, and challenges regarding building a European energy market. It outlines the main legislative packages and regulations, institutional arrangements of organizations involved, ongoing initiatives to implement regulations around unbundling transmission system operators and setting network codes, and the current status of wholesale electricity and gas markets and retail markets. It concludes with recommendations around integrating renewable energy through market forces, harmonizing capacity mechanisms, increasing gas market liquidity, and further liberalizing retail markets through smart technologies and more consumer participation.

1. Madrid, November 24th 2014
Building a European Energy Market:
Legislation, implementation and challenges
Tomás Gómez & Rodrigo Escobar
supported by FUNCAS

2. 2
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Contents
• Legislative package
• Institutional arrangements
• Ongoing Initiatives
• Current situation
• Challenges and recommendations

3. 3
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Legislative package
3rd
pack
Reg
713/2009
Dir
2009/72
Dir
2009/73
Reg
715/2009
Reg
714/2009
Infrastructure
pack
Reg
347/2013
CEF Reg
1316/2013
Transparency
Reg
1227/2011
(REMIT)
Reg
543/2013

4. 4
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Institutional arrangements
Council EPEC
CEER ACER ENTSOs
European
associations
NRAs MSs TSOs National
stakeholders

5. 5
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Ongoing Initiatives
3rd
pack
Reg
713/2009
Dir
2009/72
Dir
2009/73
Reg
715/2009
Reg
714/2009
Infrastructure
pack
Reg
347/2013
CEF Reg
1316/2013
Transparency
Reg
1227/2011
(REMIT)
Reg
543/2013
Unbundling.
TSO certification
NCs/Guidelines
TYNDP
PCIs
Transparency platform
REMIT implementation:
CEREMP, IA, ARIS…

6. 6
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Current situation: Wholesale markets
Wholesale electricity markets
• Day-ahead coupling of wholesale electricity markets
– Multi-regional coupling of Central-West, Nordic, Great Britain
and South-West Europe
• Ongoing coupling of intra-day markets and progressive
coordination of TSO national balancing markets
Wholesale gas markets
• Wholesale gas markets with limited liquidity and congested
interconnectors
• Heterogeneous and non-fully transparent interconnection
tariffs and long-term contracts that prevent efficient cross-
border trade

7. 7
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Current situation: Retail markets
• Retail gas and electricity markets remain local basically
dominated by few incumbents
• Important differences on final prices for residential and
industrial consumers among Member States
• Approximately half of Member States maintain regulated final
prices mainly for residential consumers
• Consumer satisfaction with electricity and gas provision
services is low in comparison to other goods or services

8. 8
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Challenges and recommendations (i)
Wholesale electricity markets
• Integration of mature renewable technologies should be
mainly driven by the market
• Capacity remuneration mechanisms should be harmonized
• Level playing field for technologies through carbon prices
stabilization
Wholesale gas markets
• Increasing uncertainty on future demand and prices
• Need for more liquid and transparent hubs (The Iberian Hub)
• Flexibility is required to integrate electricity and gas markets

9. 9
Instituto de Investigación Tecnológica
Escuela Técnica Superior de Ingeniería ICAI
Building a European energy market
November 24, 2014
Challenges and recommendations (ii)
Infrastructures
• Implementation of the Infrastructure Package
• Development of EU-wide development plans (TYNDP)
• Priority of cross-border Projects of Common Interest
Consumers and retail markets
• Progressive liberalization of final prices
• New services facilitated by the new technologies
– ICT and smart meters and grids
– Distributed resources: generation and demand response
• More players and participation of consumers will bring more
competition in the market

10. Instituto de Investigación Tecnológica
Santa Cruz de Marcenado, 26
28015 Madrid
Tel +34 91 542 28 00
Fax + 34 91 542 31 76
info@iit.upcomillas.es
www.upcomillas.es
Thank you for your attention !!!