Regulation of Electricity Markets in Europe in Light of the Clean Energy Package: Prosumers and Demand Response

Traditionally, European energy market regulation has dealt with electricity and gas from a market-oriented perspective in the effort of creating a common internal energy market to foster economic efficiency, security of supply and competitiveness. To a lesser extent, EU law also deals with oil, shale gas and other unconventional hydrocarbons – industries outside of this contribution’s scope. The content of EU energy market regulation initially focused on the transition from public monopolies of vertically integrated energy companies to a competitive market. The new set of rules contained in the CEP go a step further in the strengthening of the Energy Union, and they seek to adapt the rules dealing with electricity, renewable energy sources, energy efficiency and regulatory energy agencies to rapid the technological changes we have witnessed over the past decade in Europe. Two factors are key in understanding the reasons behind the regulatory changes and the content of the CEP, which we discuss in this chapter. Energy markets in Europe have been and are currently being transformed due to the integration of renewables into the grid. This brings forth technical and legal challenges for the transformation of "smart markets" in energy as already seen in 2011 by the German Bundesnetzagentur. These changes in generation and consumption require that the market sends the right signals to guide both the generation, consumption and transmission patterns for the future grid. The second guiding element of the CEP is also connected to those technological changes as they now have made possible the active participation of the end-consumer as a responsive and responsible ‘prosumer’.