What does Liberalization and Unbundling
of Energy Markets mean?Definition
The liberalization of the energy market means the opening of the electricity and gas market to free competition. This has broken up existing monopolies and opened the market to more participants. In most cases, liberalization was accompanied by unbundling, which made a distinction between generation, transmission and distribution/retail in the energy sector. The aim was to make electricity supply more efficient by integrating competitive forces where possible and by integrating regulation where necessary. In Europe, liberalization began in 1996 with the adoption of the first European Directive.