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Olsen, Ole Jess; Skytte, Klaus --- "Competition and Market Power in Northern Europe" [2003] ELECD 49; in Glachant, Jean-Michael; Finon, Dominique (eds), "Competition in European Electricity Markets" (Edward Elgar Publishing, 2003)

Book Title: Competition in European Electricity Markets

Editor(s): Glachant, Jean-Michael; Finon, Dominique

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843761785

Section: Chapter 7

Section Title: Competition and Market Power in Northern Europe

Author(s): Olsen, Ole Jess; Skytte, Klaus

Number of pages: 24

Extract:

7. Competition and market power in
Northern Europe
Ole Jess Olsen and Klaus Skytte

INTRODUCTION

Northern Europe provides an interesting case study with respect to the
development of competition in the electricity supply industry. Trans-
mission lines and established rules for exchanging power have long since
integrated the electricity utilities in the four Nordic countries, Denmark,
Finland, Norway and Sweden, facilitating beneficial exchanges between
hydropower and thermal power. Finland, Norway and Sweden were among
the first European countries to implement radical national reforms and to
institutionalize cross-border trade.
The focus of this chapter is on the development of a common electricity
market in Northern Europe. We will also include Germany in our study, as
it is becoming increasingly connected to, and integrated with, the power
market in the four Nordic countries.1 Increased cross-border competition
is an obvious means to improve competition. However, the persistence of
market imperfections can create obstacles for the achievement of efficient
competition. Such market imperfections are likely to be amplified by differ-
ent national traditions and different institutional choices for the electricity
supply industry. The chapter starts with a short introduction to the electric-
ity market in the five countries, and the economic and environmental
advantages to be gained from further integration and cross-border compe-
tition. In the next section, the main features of the national reforms are pre-
sented. We provide more details on Denmark as the other four countries
are discussed in other chapters. Then follows a discussion of different ...