Dismantling a Competitive Electricity Sector: The U.K.’s Electricity Market Reform

Once the poster child of energy market liberalization, the U.K. is now grappling with the difficulties of balancing competitiveness, energy security and ambitious decarbonization. But will the recent proposals for Electricity Market Reform be effective? The strategy as a whole does not seem consistent. The EMR is not a fundamental redesign of the market, as the government suggests, but an attempt to combine subsidies and the market to reach an intermediate solution between the market and a government-directed low-carbon investment plan. The consumer and macroeconomic impact is likely to be negative.