This European Commission is preparing a reform of the electricity market to curb volatility seen during the energy crisis and to accelerate the sector’s decarbonisation. All parties involved, from national governments to energy companies, are positioning themselves in anticipation of Brussels presenting its proposal in mid-March. The process has drawn attention from political centers and industry groups alike as the bloc seeks to balance reliability, price stability, and sustainability in a changing energy landscape.
Spain moved quickly, offering the first comprehensive proposal to Brussels on the direction such a major market reform should take. The plan, crafted by the Ministry for the Ecological Transition under Vice President Teresa Ribera, envisions restructuring the market by introducing technology-based segmentation and long-term contracts. It would push for fixed prices for nuclear, hydropower, and renewable energy, aiming to lock in predictable costs and incentivize investment in key technologies.
A dozen energy employers, led by the major electricity firms under the Aelec umbrella, published a joint document that opposed the central features of the government’s plan. Although the text did not name the Spanish proposal outright, it circulated in Brussels in an English version soon after the government summit led by the Ministry of Ecological Transition urged industry players to weigh the reforms more seriously.
The Spanish proposal suggested that electricity produced by gas and coal plants remain part of the current daily and intraday markets, with compensation through capacity payments when demand is highest. Renewable, nuclear, and hydraulic generation would be tied to fixed prices through long-term contracts with the electrical system. Renewable energy prices would continue to be determined by mechanisms similar to existing tenders, while nuclear and hydro would receive price setting from the regulator.
The document signed by the energy employers questioned the feasibility of a market centered on long-term, fixed-price contracts and warned that governments should retain the freedom to contract as they see fit. It argued that an electricity market model dominated by centralized purchases of marginal energy through fixed-price arrangements, potentially imposed by member states, could disrupt competition and market flexibility, hamstringing the evolution of the grid. The parties also asserted that producers and consumers should retain broad freedom to participate in contracts or sell into the market, without restrictive obligations, a stance viewed as a challenge to Ribera’s recommendations.
Within the text, there are cautions about how such a model might fragment the internal market and hinder system flexibility. The authors contended that any reform must preserve genuine choice for all market participants and avoid locking in solutions that suppress innovation or lock in a single path for future investments. The document also touched on the instrument of difference contracts and the possibility of fixed-price arrangements as a tool to stabilize prices, while signaling concerns about unilateral impositions that limit long-term investment signals.
At the time of publication, the draft from the employers’ group bore the logos of various participants. It included the Iberian utilities Aelec, which represents Iberdrola, Endesa, and EDP, along with renewable energy associations such as Appa, AEE, and UNEF; as well as other industry bodies like Aprie, Armie, Aedive, Afbel, Aepibal, Entra, and the Portuguese electricity association Elecpor. The array of logos underscored the breadth of actors watching the reform closely and hinting at potential divisions within the sector about the best path forward.
Following the public release, UNEF, the photovoltaics association, decided to withdraw from the proceedings. Several member associations, including Aedive, AEE, Aepibal, Afbel, APPA Renovables, and Aprie, issued a clarifying memo stressing that the published text was not a definitive statement of their collective position. They asserted that the document should not be interpreted as a formal stance against national proposals but rather as a technical and economic framework to ensure the future smooth operation of energy markets. The memo emphasized constructive engagement and highlighted the importance of criteria that would support stability, resilience, and efficiency as markets transition toward more sustainable generation and greater grid flexibility.
As the debate continues, observers note that the eventual reform package will likely reflect a compromise among security, affordability, and decarbonisation goals. Brussels faces a balancing act between maintaining reliable electricity supply and encouraging the investment signals needed for cleaner energy sources. The discussions also underscore the influence of national perspectives and industry priorities on the shape of the proposed rules, with many stakeholders awaiting the Commission’s formal proposal and technical assessments that will guide final policy choices. In this evolving scenario, the outcome will shape how member states structure long-term capacity investments, how they price different generation technologies, and how consumers experience electricity pricing over the coming decade. The process will continue to unfold with ongoing consultations and briefings as the European Union tests various models for market design, price formation, and system flexibility, all with an eye toward a resilient, decarbonised energy future.