Concrete steps towards a common European energy market

Press release

The European Commission has today approved the proposal for the so-called ‘third energy package’. With its legislative proposal the Commission wants to improve the functionality of the electricity and gas markets and promote a single European energy market. This means that national authorities and transmission system operators (TSO) will be required to cooperate more closely both on EU-wide and regionally.

An integrated electricity market will increase competition and improve efficiency, and thus also keep prices competitive. At the same time, security of supply will improve and sustainable development targets will be met with the least cost to society. “Creating a single European market for goods and services is at the very core of the EU. For many commodities this is already a reality, and now the EU wants to extend free trade also to electricity,” comments Fortum Senior Vice President, Development, Timo Karttinen. Whether the cooperation will lead to concrete improvements in the planning, construction and operation of transmission infrastructure, is a central question.

A regional retail market benefits the consumer

For the first time, the Commission sets as target the creation of regional retail markets in which a consumer can buy electricity also from another country. This will bring the benefits of increased competition closer to all EU citizens.

As the markets integrate and as electricity flows between countries more easily, the coordination of the EU energy policy must also improve significantly. Various national interventions lead to distortion of competition and hinder reaching the integration targets. Coordination will soon be put to concrete test, when member states attempt to reach the common European target of increasing the share of renewable energy sources to 20% by the year 2020 with national actions. “Everyone knows that an EU-wide support system would mean less cost to society, but the temptation of setting up national support systems seems to be overwhelming,” says Timo Karttinen.

TSO unbundling crucial to market functionality

The most tangible of the Commission’s proposals concerns the unbundling of TSOs with which the Commission wants to ensure the operators’ independence. “Unbundling is crucial for the functionality of the electricity market. The prerequisite of independence is that no electricity producer or supplier has controlling power in a TSO. It is unfortunate that the EU does not have legal basis to propose regional organisations. Fortum has for years promoted closer cooperation of Nordic TSOs with a common Nordic TSO as the ultimate goal,” concludes Timo Karttinen.

Fortum Corporation
Corporate Communications

Further information:
Esa Hyvärinen, Vice President, Public Affairs, tel. +358 40 82 62646