Assessment of the impact of policies to enhance buyer power in EU wholesale gas markets
Vivid Economics was commissioned by DG ENER to assess policies to strengthen buyer power in EU wholesale markets. The work was motivated by a concern that gas prices are much higher in Eastern Europe than in North Western Europe and the sellers are highly concentrated in the east. This concern led to a political proposal to introduce a single buyer in order to balance seller market power. The work examined evidence on single buyers and other wholesale gas market policies to develop a novel new model to quantify the price and welfare impacts of single buyers. This enabled relative market power to be modelled on both the sell and buy side simultaneously for the first time. It concluded that the introduction of additional sellers and market integration through greater interconnection would be much more desirable, effective and feasible than a single buyer, except in the case of the provision of strategic reserves. The work contributed to DG ENER’s policy announcement known as the Winter Package 2016.
The final report can be found here.
- DG ENER
- Practice areas