Brussels, 10/07/2015 (Agence Europe) - As part of the Summer Package on energy that it will unveil on 15 July, the European Commission is to propose ideas for defining a new design electricity market so that the future European-wide integrated electricity market can manage large scale cross-border flows of big volumes of electricity from renewable sources. The resulting consultation is expected to give more certainty to investors, and on the link between wholesale and retail markets.
The Commission wants to design a new concept of the market in order to take much more account of actors, to take account of more decentralised production, and to integrate more flexible supply and demand. It also wants to reduce the needs for intervention, like capacity mechanisms.
For the Commission, the reform of the markets will have to ensure that the energy transition is made at lower cost and makes the barriers to the deployment of renewables disappear (for which participation on an equal footing with conventional energy sources will have to be ensured).
The Commission also wants to support demand management, especially by linking retail prices more closely to wholesale prices in order to give economic signals to consumers.
In order to guarantee the smooth functioning of the markets in the short term, the Commission wants to create a cross-border intra-day market to make the reserve capacities come into full play from one country to another, and to facilitate the flow of renewable-origin electricity.
The Commission also wants to strengthen the long term markets in order to guarantee investment. Long term products will have to allow protection from price volatility, but long term contracts will have to be in line with competition rules.
In addition, this new market design will have to bring a response to the financing of renewables, which require a stable investment framework. The support mechanisms will have to be founded on the market and at the same time to deal with market shortfalls, to ensure cost-effectiveness, and to avoid overcompensation and market distortions, in line with the guidelines on state aid for the environment and energy. The Commission also wants to create a framework for favouring the cross-border participation in support mechanisms as part of the coordinated approaches at regional level.
On this basis, the Commission could proceed to revision in 2016 of the legal weapons for the electricity markets, including the electricity directive and regulation, the decision establishing the Agency for the Cooperation of Energy Regulators - ACER (to strengthen its competences on regulation and arbitration), the regulation on infrastructure, and the directives on supply security. (Emmanuel Hagry)