The Czech Presidency of the Council of the European Union has introduced additional flexibilities in its new draft compromise on the proposal for an EU regulation on the emergency response to soaring energy prices, including the possibility for Member States to set several different caps with regard to the revenues of electricity producers.
While the European Commission’s proposal would apply a European cap of €180/MWh to revenues of all inframarginal electricity producers – i.e. those whose marginal cost is below the wholesale market price (predominantly the majority of renewables, nuclear and lignite - see EUROPE 13021/1, 13022/12) – Prague is suggesting that Member States could maintain or introduce measures that further limit these revenues, “including the possibility to differentiate between technologies”.
Member States could also take the decision as to whether the cap should only apply to 90% of inframarginal revenues that exceed €180/MWh.
In addition, the draft compromise leaves open the option of not applying a cap on inframarginal revenues from sales of electricity on the energy balancing market (which is used to ensure the balance between supply and demand) and revenues derived from compensation for redeployment (a measure changing the generation and/or load pattern in such a way as to change the physical flows on the transmission system and relieve physical congestion) and counter-trading (trading undertaken by network operators between two bidding areas with the goal of relieving physical congestion).
With regard to sources of electricity generation that are covered by the cap, the Czech Presidency proposes that Member States should be able to extend the cap to all hydropower units, rather than limiting it to hydroelectric without reservoirs.
Greater flexibility in identifying peak hours
Prague also wants there to be greater flexibility with regard to the binding target of reducing gross electricity consumption during peak hours.
It has suggested that Member States may decide to target a different percentage of peak hours from the Commission’s proposal, i.e. hours corresponding to a minimum of 10% of the total hours of the month, “as long as at least 3% of peak hours are covered, (opposed to 7% in the previous draft compromise - see EUROPE 13029/7) and as long as the energy saved during peak hours is at least equal to the one that would have been saved with the parameters (proposed by the Commission)”.
Derogation for small networks
In addition to those proposed in its previous version, the draft compromise also introduces a new derogation for the outermost regions and for Cyprus and Malta (see EUROPE 13029/7).
According to the latter, Member States could decide whether or not to apply the target of reducing electricity consumption during peak hours and the capping on inframarginal 7 revenues to electricity that is generated in small isolated networks, or small connected networks.
The Czech paper will be discussed by the Member States’ ambassadors to the EU (Coreper) on Wednesday 28 September, with a view to reaching a political agreement on Friday 30 September at an extraordinary meeting of the EU27 energy ministers.
See the draft compromise: https://aeur.eu/f/3a1 (Original version in French by Damien Genicot)