Twenty seven countries European Union IIreached an agreement on reform this Tuesday electricity market. After a busy day of meetings and following the warning of the Third Vice-President and Minister of Ecological Transition, Teresa RiberaThe pact, which said at the beginning of the Spanish presidency of the EU that it would not sleep without a deal, was announced in the afternoon. Born in the heat of reform energy crisisElectricity prices have risen due to the urgent need to reduce dependence on fossil fuels such as gas.
1. When does it start?
First of all, discussion electricity market not finished yet. The agreement between the countries was born following the European Commission’s proposal on electricity market reform in March and currently aims to provide services such as: authority for Negotiations with the European Parliament this is starting same thursday. This is what is known in European jargon as ‘trilogies’. fine adjustment more text to give final version of the legislation. Both the presidency The European Union and the European Commission aim to reach an agreement before the end of the year because once an agreement is reached on the text, it will become legislation of the European Union. new rules both need approval Council and the European Parliament. Elections are due to be held in Brussels in mid-2024, so any delay in timing could ruin the entire process.
2. Will prices fall?
The reform initiative stemmed from this energy crisis last two years to try Eliminating the link in the prices of fossil fuels, Like gas, in the price of electricity. But that’s not the point. lower the priceHowever prevent surge and encourage renewable energy input in electrical systems. The substance of the proposals (from Parliament, the Commission and the Council); Futures market, which guarantees more stable prices through two formulas: the facilitation of private energy purchase agreements (known in English as ppa, for ‘power purchase agreement’) between consumers and producers, for example through State guarantee systems, and their establishment as a model for public financing. in the name contracts for differences. This concept refers to a model. Long-term contracts made by the government support investments A system in the production of electricity that supplements the market price when it is low and where the producer is asked to return some amount when the market price rises above a certain limit. excessive snow for generators. This way, if prices are high, as in the energy crisis, different governments receive revenue that they can redistribute to reduce the impact on consumers’ pockets.
3. Will it be stated on the invoice?
Beyond the attempt to favor the futures market, spanish case Its impact seems limited in the short and medium term. The guiding approach of the Ministry of Ecological Transformation Teresa Ribera Initially, it involved forcing existing plants (hydraulic and nuclear) to leave the daily market and entering into contracts for differences (regulated fixed prices) with them as a way to control prices while avoiding extraordinary revenue generation from these technologies. But in the end the formula adopted will be: Since it is voluntary, its effect is blurred. Additionally, Spain has placed particular emphasis on facilitating capacity markets that serve to reward existing technologies as a guarantee of supply. accelerated mechanism This would reduce the impact of gas on the daily market, and although the proposal moves in that direction, it does not fully encourage this.
4. No other changes?
The Council agreement, which has not yet been published in full, also includes more “consumer protection”, recalling measures proposed by the European Commission. obligation for electric companies offer fixed price rates or Consumers’ right to share excess energy with neighbors without the need to create energy communities that could encourage self-consumption.
5. Will it prevent the crisis from happening again?
What has been done is to strengthen the role of the Council when announcing a decision. temporary price crisis at regional or Union level and they will change the conditions for Governments to declare it from the date on which they may accept it. extraordinary measures To reduce the impact of high prices. Therefore, a price crisis is defined when there are “very high” quotations in the wholesale electricity market that last for at least six months and strong increases in retail prices are expected to continue for at least three months.
6. Are there any quick-acting measures?
The most urgent of these is for the Council to accept that Member States may impose a ceiling on the tax. extraordinary income producers with the lowest marginal costs (hydraulic and nuclear) 30 June 2024, under the same conditions as the current emergency measure. In the case of Spain, this is the limit of 67 euros per megawatt-hour on the sale of energy from these technologies, which is in principle in force until the end of this year. Large electricity companies, the ones most affected, have been demanding that this situation be eliminated for months. This measure served to contain the prices of interest rates on the free market during the worst months of the crisis.