Towards a Global Electricity Market

In principle, solar and wind are more than enough to deliver any amount of energy that the world’s population might need. But these sources are usually best exploited in areas that are far from centers of demand. It is technologically challenging to transport electricity over large distances and even more to store it. As a consequence, electricity markets have tended to develop as regional markets.

To change this, proposals have been made recently to generate electricity by other means. One example is building large-scale solar thermal power plants in North Africa and transporting the output through high voltage direct current power lines to the demand centers in Europe. Projections claim that by 2050, 700 TWh electricity per year (roughly a quarter of European electricity demand in 2006) could be transmitted, raising yearly revenues of €35 billion. Another example is the January 2010 agreement by several European countries adjacent to the North Sea to connect their production of wind energy.

Yet projections suggest that in the medium term the future energy mix for electricity generation will still contain fossil energy and nuclear power. The share of fossil energy in the future energy mix strongly depends on the implementation of low-carbon technologies such as carbon capture and storage and the ability to substitute low-carbon for high-carbon energy sources. Nuclear power will also constitute an important option due to its provision of emission-free power, but there remain major concerns about its use.

What are the options for the future energy mix for electricity generation and how is it influenced by public policy? What is the appropriate time frame for implementation to avert serious consequences of climate change? And are large-scale supranational projects for electricity generation a sensible and financially viable strategy for governments and the private sector to prepare for a carbon-free future?