Fortnightly Magazine - February 2005

Renewable Energy & Emissions Trading: Building the British Model

The UK offers a model for renewable energy growth.

The United Kingdom stands at the forefront of renewable energy market development. The 2002 Renewables Obligation sets out a progressive strategy for achieving environmental protection, energy reliability and a competitive marketplace for industry and investment. The goals are ambitious: generating 10 percent of total UK electricity supply from renewable sources by 2010; 15.4 percent by 2015; and 20 percent by 2020.

Europe: Picture of a Stalled Competitive Model

Several hurdles remain to further liberalization and full competition in the electricity sector.

Two major trends can be observed in Europe’s electricity sector. First, the increasing importance of private-sector participation in a sector that was traditionally viewed as belonging to the state. The second major trend in Europe is that of the massive amount of merger and acquisition activity across the continent. At the same time, several hurdles remain to further liberalization and full competition in the European electricity sector.

The Future of Electric Competition: Concentrated Power

An analysis of competitive power markets finds that oligopolies are the end game for liberalized power markets.

The British wholesale power market is about to enter a new phase. Having enjoyed a long period of surplus capacity, the combination of the forced retirement of some nuclear plant and continued demand growth is likely to lead to a capacity shortage within the next three to four years, and it is by no means clear whether the market, as it currently operates, will be able to maintain secure supplies.
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