A green future for European electricity? :Energy sources, policies and further determinants of the household price of electricity

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

There is a controversial debate on how the transition towards electricity generation from re-newable energy sources (RES-E) affects European electricity markets in terms of prices and market efficiency. This thesis contributes to this debate by providing the first panel economet-ric analysis of how both different sources of electricity generation and electricity market poli-cies impact on the household price of electricity. Based on a sample of 29 European countries (EU-27 and two more), it finds that electricity production from combustible sources, natural gas, hydro and wind for the time span of 1991-2007 had a significant price lowering effect (ceteris paribus, on average). In contrast to that, results for the time span of 2004-2007 suggest that RES-E had a price increasing effect which can be related to its rapid growth in the 2000s. Results also suggest that Feed-in-Tariffs, regulatory reforms and the European emission trad-ing scheme play an important role, but their impact depends on country specific characteris-tics. The latter seem to be an important factor in determining the level of prices.