The End of the Marginal Costs Model in the Netherlands?
(Room D201-D202, Elicium, Second Floor)
10 Jun 15
11:00 AM
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12:30 PM
Tracks:
Theme: Europe's Transitioning Power Sector
Today’s situation in the energy business is a complex one. Whereas the well-functioning of the Dutch power sector still strongly relies on a number of large generation companies, current market circumstances are dim: On the one side, enormous investments in renewable generation are expected, on the other side the expected profitability of incumbent parties is low as producers have great difficulty to recover their costs. From a long term system reliability and stability point of view, the power system is in danger, as many of the current players are running negative margins.
In this market climate, a level playing field is non-existent: specific technologies receive governmental subsidies impacting both market price levels and cross border power flows. In the Netherlands these effects start to press hard on the power sector, accelerated by an overcapacity of generation capacity and a high import level of electricity. Meanwhile, a trend towards decentralized electricity production is visible and supported by various financial incentives. For these reasons, it is evident that in the long term the current market model will not be capable of providing a stable and healthy business environment for all market players.
In this paper a transparent and objective overview is given of the current situation and the foreseen future of the Dutch electricity market is discussed. This is complemented by cases highlighting the ‘missing money problem’, with suggestions to modify the current market design and behaviour seen/expected in the market and its impacts (what if scenarios).