Cover of the publication Upgrading the Market

Secure and cost - efficient power markets play an important role in reaching the EU's energy and climate targets. The study shows that a flexible power market is in line with achieving the targets. It provides security of supply and supports the European Internal Market as well as the integration of renewable energies.

The experts of Connect Energy Economics conclude that the required flexibility can best be provided by upgrading the so-called Energy-Only Market Design, which is the predominant market design today. The introduction of capacity markets on the other hand would lead to an unnecessary cost increase, since they would distort the capacity mix at the expense of flexible technologies and compromise competition in the Internal Market. Therefore, capacity markets pose a risk for the EU targets.