Initially announced for mid-December 2022, the long-awaited public consultation on the reform of the European Union’s electricity market design was finally opened by the European Commission on Monday 23 January.
The legislative initiative (a proposal for a directive), expected by the end of March, will aim to make “urgent adjustments” to certain aspects of the electricity market in order to make it more resilient and “reduce the impact of gas prices on electricity bills” while supporting the energy transition, the institution said.
The Commission thus intends to “provide added value swiftly to EU citizens and companies during the ongoing crisis and the 2023/2024 heating season”.
The forthcoming proposal for a directive is therefore not intended to address all of the longer-term challenges facing the European electricity sector as a result of the increasing share of renewable energy. “Some of these challenges will require ongoing policy reflections going beyond the scope of the current reform”, the Commission says, mentioning the need for stronger local price signals to drive investment where it is needed.
The consultation covers four main areas: - make electricity bills less dependent on short-term fossil fuel prices and stimulate the deployment of renewable energy; - improve the functioning of the market to ensure security of supply and make full use of alternatives to gas, such as storage and demand response; - strengthen consumer protection and empowerment; - improve transparency, monitoring and market integrity.
According to the consultation document, the Commission wants to encourage the use of long-term contracts to ensure that the energy bills of European consumers and businesses become more independent of price fluctuations on short-term markets.
It intends to propose ways to increase the share of power purchase agreements (PPAs) in the overall electricity market, using as an example public tenders for renewable energy in which a share of a project could be contracted by PPAs.
The other type of long-term contract envisaged by the institution is ‘two-way CfDs’ (contracts for differences), which ensure that producers’ revenues (and the corresponding cost to consumers) provide an adequate incentive to invest and are less dependent on short-term markets.
The consultation also seeks stakeholders’ views on the possibility of transforming certain aspects of the temporary emergency regulations adopted in 2022 - in order to mitigate the impact of high energy prices on consumers and businesses - into “more structural features” of the electricity market.
The consultation period will close on 13 February with a view to unveiling the proposed directive by the end of March.
To participate in the consultation: https://aeur.eu/f/51c (Original version in French by Damien Genicot)