On the occasion of its 20th anniversary, the Luxemburg Institute for Regulation (ILR) has reflected on the liberalisation of the energy market.
2017 is a milestone for both the ILR celebrating its 20th anniversary and the energy market that is celebrating 10 years of market liberalisation.
Three major European directives, transposed into Luxembourg law, have gradually established the principle of free competition. The first directive dates back to 1996. It was transposed to Luxembourg in 2000 with the organisation of the electricity market. For the first time, this law assigned powers in the field of electricity to the Luxembourg Telecommunications Institute (ILT), which has since become the Luxemburg Institute for Regulation (ILR). This law also marks the beginning of the liberalisation of the electricity market.
In 2001, the Institute's competencies were extended to the natural gas market. In the same year, the ILR Energy Department took charge of managing the compensation fund, now called the compensation mechanism, which supports the development of renewable energies. This mechanism is used not only to finance the deployment of renewable energy, but also for high-efficiency cogeneration plants. The net costs of the clearing mechanism amounted to €66 million in 2015.
Legislative changes, both at national and at European level, led to the restructuring of the energy markets in 2000. Several former monopolist structures in charge of energy delivery and supply disappear, split or merge to allow the creation of separate and independent enterprises and to prepare for the liberalisation of markets planned for 2007.
The monopoly was terminated in 2007 with the organisation of the electricity market, which allocated to the ILR the necessary powers to ensure its full role as a regulator.
Since this total opening of energy supply markets, there is no longer a monopoly and competition can play fully, with all the benefits this means for the consumer.
The energy market has continued to evolve since 2007, notably to promote the use of energy produced from renewable sources. In 2009, the European Union sets 20% of the share of renewable energy sources in the EU's final energy consumption by 2020. By 2015, Luxembourg has a share of 5%, while its objective for 2020 is set at 11%.
