History in Brief
Liberalization of the Energy Market
The past few years have been marked by the successive liberalization of the energy markets and the opening up of the national markets. Energy costs are a major component of production costs for companies in international competition. Liberalization is not only expected to create bigger markets, which should – according to the vision of EU – make energy production, transport and distribution more efficient and increase supply security, but it will also enlarge the options available to end customers and lower the prices of electricity and gas over the long term.
Directives and their Objectives
Within the scope of the deregulation, the Commission passed the following Directives to guide and promote competition and prevent the formation of monopolies:
- Directive <90/547/EEC> of the Council of 29 Oct. 1990 on the Transit of Electricity through Transmission Grid
- Directive <91/296/EEC> of the Council of 31 May 1991 on the Transit of Natural Gas through Transmission Grids
- Directive <96/92/EC> of European Parliament and the Council of 19 December 1996 regarding common rules for the internal markets in electricity and natural gas
- Directive <98/30/EC> of European Parliament and the Council of 22 December 1998 regarding common rules for the internal markets in natural gas
- Directive <2003/54/EC> of the European Parliament and of the Council of 26 June 2003 regarding common rules for the internal markets in electricity and natural gas and the repeal of Directive <96/92/EC>
- Directive <2003/55/EC> of the European Parliament and of the Council of 26 June 2003 regarding common rules for the internal markets in natural gas and the repeal of Directive <98/30/EC>
Further objectives of the Directive were – apart from securing competition in the electricity and gas markets – to create free access to the electricity and gas grids, ensure independence of the grid operators from producers and distributors (unbundling) as well as to achieve transparency of accounting.
In Austria, the legislation of the EU was passed into national law by the individual amendments to the Electricity Industry and Organization Act (Elektrizitätswirtschafts- und –Organisationsgesetz, ElWOG) and to the Gas Industry Act (Gaswirtschaftsgesetz, GWG).The Liberalization Process in Europe
The new member states from the last two enlargement rounds are included in the liberalization process. The objectives of these Directives are being achieved at varying speeds: these are guaranteeing transparency, freedom from discrimination and open markets. While some countries already have 100% full liberalization (e.g. electricity market in Slovakia), in others the liberalization tendencies are just starting to appear. The reason is that an actual opening up depends heavily on the liberalization model selected, on how transport is made available and where balancing energy comes from and is settled as well as on how the grids are controlled.Significance of Renewable Energy
Apart from the liberalization of the electricity and gas market, the EU is increasingly promoting the use of energy from renewable sources. In Austria, this is illustrated by the amendment of 2002 to the Electricity Industry and Organization Act, which brought about a revision and transferred the provisions governing energy from renewable sources into the Renewable Energy Act 2002. The goal was to achieve the nationwide standardization of the legislation governing renewable energy and to pass Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 into national law for the promotion of electricity production from renewable energy sources in the internal market for electricity. Apart from the key function of the renewable energy balance group, the obligation to buy at a prescribed minimum price was defined by law. However, as this regime did not foresee any cap on subsidization, the Renewable Energy Act was amended again in 2006. This amendment not only put a cap on the subsidization, but also created a separate settlement agency for energy from renewable sources responsible for the settlement of the subsidy scheme for renewable energy.
Future of the Energy Market
- The future production mix that should be compatible with climate protection goals,
- The use and the subsidization of renewable energy, and
- The introduction and implementation of measures to heighten energy efficiency.