There is a need to encourage suppliers and technologies that can “smooth out” the volatility of the EU energy market, says the Agency for the Cooperation of Energy Regulators (ACER) in a note published on Wednesday 13 October.
According to the Agency, the future electricity system is likely to remain volatile in nature, with prices varying considerably depending on the availability of generation, as global electricity generation from renewables is set to increase to decarbonise our economies.
Regulators therefore recommend finding ways to smooth out this volatility, whether through batteries, larger-scale storage, via aggregated demand response providers such as electric vehicle fleets, the development of energy communities, etc.
While the European Commission published a ‘toolkit’ on the same day to help Member States cope with rising energy prices (see EUROPE 12811/1), the note also discusses Spain’s proposals to establish a strategic fossil gas reserve and to make joint gas purchases.
Regarding the first proposal, ACER points out that stockholding obligations may reduce supply efficiency and restrict trading activity on the hubs, which could lead to higher end prices. It therefore recommends an appropriate analysis of the proposal.
With regard to joint purchasing, the regulators have doubts about the impact of such a measure on the price of gas supplies, as the current circumstances constitute a “sellers’ market”. Therefore, “any collective buying proposition from European companies would need to be attractive vis-à-vis, say, major demand markets in Asia that are currently driving prices upwards”, ACER says.
See the note: https://bit.ly/3FL7DDJ (Original version in French by Damien Genicot)