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The need for smart EU energy markets

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It is easy to be pessimistic about the state of EU energy policy and the ability of policy-makers to ensure the three objectives of affordability, security of supply and decarbonisation are achieved. However, whilst the challenges seem to multiply, there are also some significant opportunities emerging. New technologies exist and are under development that have the potential to revolutionise the way we consume energy. These technologies allow us to control and optimise energy usage and have the potential to significantly reduce overall demand along with the costs of retaining the continuous balance between supply and demand.

However, EU energy markets are not well-designed to support the growth and development of new businesses with new business models looking to develop and sell these technologies and there is a risk that the transformation of the energy system will be delayed, with potentially severe consequences for delivery of policy objectives. This paper explains why the development of demand side markets should become the priority for the incoming EU Commission as it looks to take forward the Internal Energy Market Agenda and proposes where the focus of action should be.

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