Impact of EU 2030 climate and energy policies on the iberian electricity market

Abstract

While the EU is making good progress towards meeting its climate and energy targets for 2020 (EC, 2015a), an integrated policy framework 2020 onwards is needed to ensure regulatory certainty for investors and a coordinated approach among Member States (EU, 2014abcd). In this context, the former European Commission launched two communications in 2014 (“A policy framework for climate and energy in the period from 2020 to 2030”(EC, 2014a) and “Energy Efficiency and its contribution to energy security and the 2030 Framework for climate and energy policy”(EC, 2014b)) which set the basis for the 2030 objectives approved by the European Council by the end of 2014(EC): at least 40% greenhouse gas emissions reduction; at least 27% of renewable energy share; at least 27% increasing of energy efficiency and 15% electricity interconnection target. Now the debate is moving from strategy to action, from long-term vision to actual policies and regulations, looking for the most appropriate tools and mechanisms to achieve the targets in the most effective, efficient and equitable manner. This thesis aims to modestly contribute to this debate by:  Developing a simplified model of one of the relevant electricity markets in Europe, the Iberian electricity market (MIBEL), which could be eventually used as a tool for assessing the effects of potential European energy and climate policies in the electricity sector;  Running a first hypothetical case study with this model in order to test it, and show some of their potential uses when assessing European energy policies. The case study aims to assess potential effects in the Iberian electricity market of different scenarios of CO2 prices and renewable energy market shares (up to 2030), which are variables that will be affected by the European energy policy that will be developed and implemented in the next years in order to achieve the European 2030 targets. Notwithstanding, the objective is not to make policy recommendations at this stage, but just to show preliminary results on potential effects that should be further tested through further research and modelling sophistication.