On March 14 the European Commission has published its long-awaited proposal for reform of the EU’s electricity market design. The reform aims at accelerating the surge in renewables and the phase-out of gas, making consumer bills less dependent on volatile fossil fuel prices, better protecting consumers from future price spikes and potential market manipulation, and making the EU’s industry clean and more competitive.
The proposed reform introduces measures that incentivise longer term contracts with RES power production and bring more clean flexible solutions into the system to compete with gas, such as demand response and storage. In addition, it will boost open and fair competition in the European wholesale energy markets by enhancing market transparency and integrity.
A renewables-based energy system will not only be crucial to lower consumer bills, but also to ensure a sustainable, independent and affordable energy supply.
Some of the main highlights of the proposal are:
• all public support for new investments in infra-marginal and must-run renewable and non-fossil electricity generation will have to be in the form of two-way Contracts for Difference (CfDs).
• CfDs are not mandatory for all new renewable generation and cannot be imposed retroactively on existing generation.
• Facilitating the deployment of more stable long-term contracts such as Power Purchase Agreements (PPAs), including guarantee schemes for PPA buyers and better framework for suppliers to issue fixed-term, fixed-price contracts.
• Grid operators will have to publish information on the available grid capacity quarterly and transparency obligations on DSOs on the status of the grid connection procedure are reinforced.
• Member states have to assess their flexibility needs and will have to design non-binding storage and demand side response targets. Member states can issue support schemes for flexibility resources.
Before entering into force the proposed reform will now have to be discussed and agreed by the European Parliament and the Council.
Recognizing the importance of energy storage in replacing fossil fuels in the energy system, along with the market reform proposal the EC has also published recommendations to Member States on the advancement of storage innovation, technologies, and capacities. The Working Document offers a more detailed analysis, also providing an outlook of the EU’s current regulatory, market, and financing framework for storage and identifies barriers, opportunities and best practices for its development and deployment.
>> The proposal for reform of the EU’s electricity market design can be read here
>> The full text of EC’s press release can be read here
>> Comments by the European Associations SolarPower Europe, WindEurope, EASE
