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ARTICLE · 12 JULY 2024

The Return Of Long-term Contracts For Electricity: Implications For Competition Policy

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The European Commission used to see long-term electricity contracts as a potential problem for the electricity sector, threatening to suffocate...

European UnionAntitrust/Competition Law
Fabien Roques
Fabien Roques
Guillaume Duquesne
Guillaume Duquesne

The European Commission used to see long-term electricity contracts as a potential problem for the electricity sector, threatening to suffocate competition before it could fully emerge after liberalisation. It now views these contracts as one of the potential solutions to the challenges the sector now faces to decarbonise. Fabien Roques and Guillaume Duquesne 1 analyse the economics behind this evolution, through an assessment of the potential pro- and anti-competitive effects of long-term contracts.

Introduction

The Commission used to see long-term electricity contracts as a potential problem for the electricity sector, threatening to suffocate competition before it could emerge after liberalisation. In recent years, there has been much focus on the potential benefits of long-term contracts to facilitate investment and the energy transition. In March 2023, the European Commission proposed a new regulation on market design that supports a greater role

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