Contracts in the reform of the EU electricity market

Abstract

This Policy Insight discusses the challenges facing the organisation of the electricity market through the lens of the EU’s market reform. Two goals that the electricity market should consider are discussed: first, ensuring the optimal dispatching of existing electricity generation at the lowest cost, and second, fostering efficient and reliable investment in new generation to reach the EU’s decarbonisation targets. The authors then investigate the challenges associated with developing long-term contracts for electricity generation.

Reference

Stefan Ambec, Claude Crampes, and Jean Tirole, “Contracts in the reform of the EU electricity market”, CEPR Policy Insights, n. 139, February 2025.