Europe Must Protect Its Electricity Market From Putin

It would be truly ironic if the totalitarian leader of a former Soviet state managed to convince Western nations to give up on the free market. Yet that’s a risk now looming over Europe’s electricity sector, as officials struggle to respond to Russian President Vladimir Putin’s weaponization of energy supply. Hopefully enlightened self-interest will prevail.

Over the past few decades, Europe has undertaken a monumental transformation of its electricity sector, dismantling national monopolies and rearranging the pieces into a common market. This has been profoundly challenging, because electricity isn’t like other goods and services: To avoid cascading blackouts, supply must meet demand perfectly every minute of every day. The result is a mind-bogglingly complex system that determines prices and allocates transmission capacity across countries and over time horizons ranging from years to seconds, with the overarching goal of allowing any and all producers — including wind, solar, nuclear and gas — to compete for consumers wherever they may be.