Most consumers expect the electricity market to work well and they pay no attention to the reasons why that is the case. In a somewhat wider context, however, that issue is important. If the relative success of the Nordic market is due to a good design of regulations and market institutions, then the Nordic experiences are useful for other countries. But if the favourable outcome primarily depends on country-specific factors or temporary circumstances, there is not much for other countries to learn.
The author's conclusion is that there are four main factors behind the relatively successful electricity market reform in the Nordic countries, namely:
- A simple but sound market design, to a large extent made possible by the large share of hydropower.
- Successful dilution of market power, attained by the integration of the four national markets into a single Nordic market.
- Strong political support for a market-based electricity supply system.
- Voluntary, informal commitment to public service by the power industry.
The second and third of these factors are “transferable”, while the first and fourth to a large extent are country-specific. The report briefly discusses all four factors.