Enel Foundation Supports Bocconi Research on the Future of the European Electricity Market
The future of renewable energy will depend on the ability of market frameworks to effectively manage price volatility. This is the central theme of the research conducted by Professor Francesco Decarolis, holder of the Enel Foundation Chair in Competitiveness & Transition at Bocconi University, supported by Enel Foundation.
The Chair—dedicated to the study of issues related to competitiveness and the global energy transition, with particular attention to regulatory aspects of markets—stems from the collaboration between Bocconi University and Enel Foundation on topics of shared interest and strategic relevance. Its objective is to promote rigorous and independent research on key issues for European competitiveness and for achieving climate targets, with a concrete focus on its impact on the regulatory debate and policy choices.
Within the framework of the Enel Foundation Chair, Professor Decarolis has published a research output titled “Reforming EU Electricity Market Design: PPAs, CfDs, and Long-Term Signals for a Renewable-Dominated System”, as part of the BAFFI Centre Working Paper Series. The study analyzes the functioning of the European market in a context characterized by growing renewable penetration and high price volatility. The paper highlights the need to ensure a balanced coexistence between Power Purchase Agreements (PPAs) and Contracts for Difference (CfDs), preventing one instrument from crowding out the other. The proposed perspective is not to replace market dynamics with greater regulation, but rather to make markets more complete and capable of providing long-term signals consistent with European clean energy objectives.
The study was presented and discussed on February 25 in Brussels during an institutional meeting at the European Parliament. The event, hosted by the Chair of the ITRE Committee (Industry, Research and Energy), MEP Borys Budka, was attended by Members of the European Parliament. Professor Decarolis was invited to contribute to the discussion on the role of long-term contracts and the evolution of the Electricity Market Design within the framework of the European energy transition.
In this context, Italy represents a particularly significant testing ground. With some of the most volatile prices in Europe, a grid characterized by congestion, and an industrial fabric largely composed of small and medium-sized enterprises with limited access to credit, the Italian system clearly illustrates both the challenges and the opportunities of a transitioning electricity market. Instruments such as the FER-X mechanism and the development of the PPA market can strengthen system stability, especially if accompanied by targeted public guarantees and greater demand mobilization, including from the public sector.
The analyses developed within the Enel Foundation Chair also feed into the national debate surrounding the so-called “DL Bollette” (Energy Bills Decree). In particular, Article 4 of the Decree introduces provisions aimed at fostering long-term contracting—a direction consistent with the research findings, according to which managing structural price volatility requires stronger contractual instruments and more complete markets, rather than repeated emergency interventions.
It is precisely in this ability to connect scientific evidence and regulatory choices that the value of an endowed Chair becomes clear: contributing independent and robust analysis to help guide public debate and European and national policymaking at a crucial stage of the energy transition.
