Adapting to turbulence: Reflections on the energy crisis and market evolution, a literature review

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Volume Title

School of Business | Master's thesis

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Date

2024

Department

Taloustieteen laitos

Major/Subject

Mcode

Degree programme

Economics

Language

en

Pages

56

Series

Abstract

This thesis is a literature review examining the dynamics of the wholesale electricity market from an industrial organization perspective focusing on market structure and key players in the market, competition, and the implications of policy interventions in the market with an emphasis on the lessons learned from the recent energy crisis. Drawing from Industrial Organization theory, issues such as market power, pricing and efficiency are further explored. Through a review of recent and applicable literature, the thesis discusses the effectiveness of policy interventions aiming for stability and fairness that were adopted during the recent energy crisis. Furthermore, the content is extended to review policy interventions aimed at increasing renewable energy sources in the market, managing the demand-side of the market, and enhancing supply security. The energy crisis revealed a significant need for reforming the markets, exposing the vulnerabilities of the market. The findings suggest that while some of the implemented policy interventions were beneficial, there is a critical need for further assessment of the effectiveness and longer-term consequences of these policies. This thesis proposes avenues for further research to better understand the complex outcomes policy designs can cause. Moreover, the assessment should keep in mind the underlying causes that drove the market to a crisis in the first hand, highlighting the need for a comprehensive reform of the market to address market structures and transparency by fostering a more competitive and sustainable landscape.

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Thesis advisor

Vehviläinen, Iivo

Keywords

energiataloustiede, toimialan taloustiede, sähkömarkkinat, talouspolitiikka

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202406164339

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[gradu] Kauppakorkeakoulu / BIZ