Regulating Energy Markets: Concluding Remarks

Abstract

This textbook has analysed the characteristics of energy markets and how the functioning of these markets can be improved through regulation. This analysis has departed from the public-interest approach which provides the analytical framework in order to search for optimal regulatory measures to address market failures. This final chapter summarizes the lessons learned regarding the key conditions for well-functioning energy markets and by what kind of regulatory measures governments may help to improve the functioning of these markets. Section 12.2 discusses the fundamental components of regulating energy markets and realizing energy transition, while Sect. 12.3 discusses the economic criteria for defining the optimal regulatory measures. Section 12.4 concludes this textbook by applying the lessons learned to the analysis of the optimal policies to promote energy transition.

Exercises

12.1 What are the regulatory requirements to foster the reliability of energy systems?

12.2 Why is applying the cost-causation principle a condition for an efficient energy transition?

12.3 Why is a decentralized organization of energy systems preferable from an economic perspective?

12.4 Why do local solutions of energy transition generally result in higher costs?

12.5 Why is realizing climate-policy objectives through markets based on decentralized decision-making more efficient than through central coordination?