After months of talks among ministers of energy from twenty-seven EU member states, a concrete milestone in the reform of the electricity market has been reached. The agreement, which Brussels proposed in March, aims to cut price dependence on fossil fuels, reduce volatility, and accelerate the deployment of renewable energy. “We have reached a consensus that would have seemed impossible a few years ago. Consumers will benefit from more stable energy prices, less reliance on fossil fuels, and stronger protection against future crises. We will also speed up the expansion of renewable energy sources,” stated Teresa Ribera, the third vice president and minister responsible for the Ecological Transition.
The accord, addressing disputes between France and Germany, now enters the final stage of negotiations between the Council and the European Parliament to finalize the legislation. Regarding Hungary’s abstention, Ribera explained that the position related to taxation and its impact on prices. She noted that there are issues not yet fully developed in the regulation, including how and under what conditions storage will be managed, and that work will continue to address them in the future.
In recent months, the Franco-German axis has moved toward agreement on long-term contracts that public institutions use to support investments. These contracts often come into play when market prices are low and require a return to producers when prices exceed a certain threshold, aimed at limiting excessive profits by generators. France and other allied countries pushed to implement a plan to keep existing facilities in operation to secure cheap prices for nuclear energy, while Germany and others sought to limit the extent of energy covered by this mechanism. The German government argued that income from these arrangements should be directed toward both the public and consumers, and it also envisioned benefits for companies to bolster their industries.
The approved proposal sets the mechanism as the sole support formula for the EU. It allows investment in new facilities and the use of existing assets such as nuclear plants, but under conditions, with the European Commission responsible for monitoring within established criteria. The aim is a level playing field across member states, as highlighted by Kadri Simson, the Energy Commissioner, and Teresa Ribera during a press conference. The agreement is framed as a victory for nuclear energy because it ensures total technological neutrality among all low-carbon energies, including nuclear and renewables, a point echoed by Agnès Pannier-Runacher, the French Minister of Energy Transition.
The agreement also covers the redistribution of income generated by the mechanism, allowing funds to be allocated to end customers and to finance energy bills for companies. It eliminates the interim nature of capacity mechanisms—mechanisms that reward certain technologies for flexibility—and streamlines procedures. The current regime permits the creation of this market type, but it is seen as a last-resort approach that is difficult to implement in practice. In response to Poland’s heavy reliance on coal, the latest proposal includes an exception until 2028 and clarifies limits on CO2 emissions within the security mechanism if supply is secured, as Ribera explained.
The reform strengthens consumer protection by enabling access to dynamic electricity prices and introduces the possibility of fixed-term and fixed-price contracts. It also contemplates a temporary application of regulated prices for small and medium-sized enterprises during crises, even if those prices do not cover costs. It is anticipated that wholesale prices will remain very high for several months, with retail prices likely to rise sharply for at least three months, which is described as a temporary electricity price crisis. The objective now is to begin negotiations with the European Parliament to shape the final text, aligned with the Spanish presidency and the European Commission, with a reform expected before the year’s end.