expected European electricity market reformIt is already underway that Brussels aims to accelerate the deployment of renewable energies, limiting gas price peaks and volatility and their impact on consumer and business bills. It will not be the radical revolution that countries like France or Spain want, and it is closer to the goal. Limited modifications advocated by the Scandinavian countries, Germany and the Netherlandsbut it will help, according to the European Commission better protect consumers and increase the predictability and stability of energy costs to increase the competitiveness of European industry. “We ask the co-legislators to consider this file as a priority,” said the energy commissioner. kadri simson.
Brussels starts from the idea that the current electricity market is efficient and well integrated and gives the following as examples: Annual savings of 34,000 million Euros Estimated by the European regulatory agency (ACER). Because, marginal pricing model -the most expensive technology sets the price- because the conclusion, following the consultation launched in January, is that it “provides the right price signals” and that alternatives yield worse results. However, it is clear that since the summer of 2021, prices have recorded unprecedented highs and lagged behind. It is felt on the bill of European households and measures need to be taken. Russian invasion of Ukraine in 2022, Although much cheaper renewable energies already supply more than a third of the EU’s electricity demand, it’s still the energy bill that drives the energy bill due to the rise in the gas price.
As El Periódico from the Prensa Ibérica group argued last week, reform now has a dual focus, which must be negotiated and agreed between the European Parliament and the Council (Member States): consumers and industry. First, it aims to provide more protection for European households with more stable prices based on renewable and non-fossil energy. To do this, consumer law take advantage of someone wide range of contractsin the long term with fixed price but also dynamic price contracts to take advantage of price volatility and consumers to take advantage of cheaper electricity times.
Protection of vulnerable consumers
This freedom of contract means, for example, that a customer can simultaneously choose a fixed contract for their normal consumption and a dynamic contract to charge an electric car at night or use a heat pump when electricity is cheaper. will have to clearly state its advantages and disadvantages. The plan also includes Member States’ last resort providers Thus, no consumer will be left without electricity and be prevented in case of a failure of his provider. low-income or vulnerable consumers and disconnected from the network due to delays in bills.
Another innovation is that it will facilitate the access of domestic consumers and small and medium-sized companies to retail prices. arranged in a crisis situation – it will be the European Commission that determines whether the criteria for declaring a crisis exists – and will more power to consumers when creating the right to share renewable energy directly (self-consumption), without the need to create energy communities. For example, individuals will be able to invest in wind or solar power plants and sell the excess solar electricity on their roofs not only to their suppliers but also to their neighbors. The Commission argues that this will enable all interested consumers, even those who don’t have a roof or can’t afford to invest in solar panels, to benefit directly from renewable energy and make their electricity bills independent of the gas price.
Stability for industry
The solution that Brussels envisions will not affect the formation of prices in the markets in the short run, but will affect the way marginal producers are charged. To ensure stability and certainty, it proposes to facilitate deployment. long-term contracts more stable with low carbon emission providers such as renewable energy or nuclear. To encourage the growth of such a deal, backers of renewable and low-carbon energy projects participating in a public support tender will be allowed to set aside a portion of the generation for sale through the deals.
In addition, marginal renewable and non-fossil electricity generation (wind, solar, geothermal, hydro and nuclear) they will need to be structured in fixed price contracts for difference (CfD) – floor and cap – that fix the price and provide some protection. If the market price exceeds the ceiling, additional profits will be collected from producers and distributed among consumers by governments to lower their bills in proportion to their consumption.
Thus, the Commission argues, the Government ensures income security at all times, while ensuring that producers do not derive unexpected profits from excessively high market prices. According to community sources, if prices fall below the minimum threshold, producers will be compensated so they can cover their costs. This option will only apply to: “new investments” and will not be applied retroactively to existing hydroelectric and nuclear power plants requested by Spain. The plan also commits to increasing the liquidity of the markets for long-term contracts that set future prices. “forward contracts” allowing more suppliers and consumers to protect themselves from excessively volatile prices for longer.
In addition, new obligations are included to facilitate the integration of renewable energy into the system and increase the predictability of generation, with more transparency and closer real-time negotiation conditions for system operators in terms of grid congestion. With this design, the Community Manager considers that there will be greater transparency and open and fair competition in the European wholesale energy markets. To increase the flexibility of the electrical system, Twenty-Seven will have to evaluate its needs and, in particular, they will have the opportunity to introduce new support regimes for demand fulfillment and storage.