Distributed generation and the problematic deregulation of energy markets in Europe

Liberalisation of the energy market in the EU in 1996 was promoted with reference to expected lower consumer prices resulting from competitive market forces. This has happened to some extent in some countries and for some consumer groups but not on the scale expected. Environmental concerns and supply security were not part of this argument. This article analyses the experience with liberalised energy markets in relation to environmental problems, resource exhaustion and supply security. The main environmental problem is global warming due to the increased emission of greenhouse gases. The solution includes a transition to distributed generation such as renewable energy sources combined with energy conservation and a number of new technologies like heat pumps, heat storage and fuel cells. In addition, new systems thinking is needed where dispersed cogeneration plants and wind farms are included as regulating power. It is concluded that the present deregulation poses severe problems for the transition to a sustainable energy development, and that insufficient analyses of these problems were made before the liberalisation was implemented. It appears that the liberalisation has primarily been introduced for ideological reasons.