Econonomics of Energy and Environmental Policy

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Regional Cooperation Potentials in the European Context: Survey and Case Study Evidence from the Alpine Region

The energiewende ("Energy Turnaround") in Germany will occur within the context of setting up Europe's internal electricity market. An important initial step will be to intensify regional cooperation between neighboring countries. We assert that the full benefits of regional cooperation will be realized by integrating Europe's market segments, e.g., real-time, day ahead, reserve markets and backup capacities, and coordinating grid expansion. This paper examines three existing regional schemes, the Pentalateral Forum, the North Sea Countries Offshore Grid Initiative and the Baltic Energy Market Interconnection Plan. The results of two case studies of the Alpine Region comprising Austria, France, Germany, Italy and Switzerland indicate that cross-border cooperation is possible even when involving only the operation of existing assets, and that the necessary capital-intensive investments in generation, renewables and transmission will be major challenges, but also potentially benefit the participating countries. We conclude that expanded regional cooperation is an essential element of Europe's decarbonization initiative and Germany's energiewende.
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JEL Codes:L51: Economics of Regulation, L94: Electric Utilities, Q42: Alternative Energy Sources

Keywords: Electricity sector, Energiewende, Regional cooperation

DOI: 10.5547/2160-5890.3.2.cger

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Published in Volume 3, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


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