There are also significant consequences and side effects to having a 'free market', they are called externalities and in the case of fossil fuels they lead to huge unconsidered costs.
I'm putting 'free market' in quotes, because even beyond externalities, the current system with zonal uniform pricing is only 'free' for a very narrow view of what constitutes a commodity or a marginal cost.
Consider two households: (a) in northern Germany close to the Danish border, located in a small town with lots of local wind turbine capacity, (b) in Southern Bavaria with very limited renewable energy production close by. There's also no adequate power transport infrastructure to get the renewable energy from the North (or elsewhere in Europe) to household (b), mostly because local politicians in Bavaria oppose putting up any visible infrastructure, whether power lines or wind turbines).
Now, during peak wind hours, a significant portion of the wind turbines in the north will go offline because the network cannot handle the load, while household (b) still needs to get their power from gas. [This is not a contrived example, but reality in Germany.] Yet (a) and (b) both pay the same price -- that of the gas producer. How is this a 'free' market?
But to your point, the good news is that people are taking electricity market design very seriously, not lightly. (Section 6 of this white paper is a good read that outlines many of the current market inefficiencies (Disclaimer: my former academic advisor and a few former colleagues are coauthors)): https://synergie-projekt.de/wp-content/uploads/2021/12/Elect...
I'm putting 'free market' in quotes, because even beyond externalities, the current system with zonal uniform pricing is only 'free' for a very narrow view of what constitutes a commodity or a marginal cost.
Consider two households: (a) in northern Germany close to the Danish border, located in a small town with lots of local wind turbine capacity, (b) in Southern Bavaria with very limited renewable energy production close by. There's also no adequate power transport infrastructure to get the renewable energy from the North (or elsewhere in Europe) to household (b), mostly because local politicians in Bavaria oppose putting up any visible infrastructure, whether power lines or wind turbines).
Now, during peak wind hours, a significant portion of the wind turbines in the north will go offline because the network cannot handle the load, while household (b) still needs to get their power from gas. [This is not a contrived example, but reality in Germany.] Yet (a) and (b) both pay the same price -- that of the gas producer. How is this a 'free' market?
But to your point, the good news is that people are taking electricity market design very seriously, not lightly. (Section 6 of this white paper is a good read that outlines many of the current market inefficiencies (Disclaimer: my former academic advisor and a few former colleagues are coauthors)): https://synergie-projekt.de/wp-content/uploads/2021/12/Elect...