Seven Member States - Germany, Luxembourg, the Netherlands, Estonia, Finland, Latvia and Denmark - wrote to the European Commission on Monday 13 February, calling for the forthcoming reform of the European electricity market, scheduled for March, to remain “focused” and concentrated on the transition to a low-carbon system at the lowest possible cost to citizens and on security of supply.
“The integration of the EU electricity market over the last decade has brought enormous benefits for the EU, including lower wholesale prices, greater security of supply and enabling the large-scale integration of renewable energy. The electricity market reform must be assessed against its contribution to these three key aims”, they write.
They propose that reform should be based on eight key principles. “By continuing to integrate EU electricity markets, through interconnection capacity, free formation of wholesale electricity prices and removing barriers to integration, we safeguard the benefits of electricity market integration.” Secondly, the incentives to invest in the green transition must be preserved and improved with a reliable, predictable and robust market framework that ensures investor confidence.
Geopolitical challenges have made the relevance of a competitive investment environment in the EU even more evident. The seven countries mentioned are therefore sceptical about making general revenue limitations, as introduced by the temporary emergency framework, a permanent feature of the regular market, “as this could compromise investors’ confidence”.
Then there is the need to ensure the efficiency of short-term markets and to optimise the functioning of futures markets.
Market incentives and a level playing field must also be maintained by removing barriers to power purchase agreements (PPAs) and Contracts for Differences (CfD). However, these agreements must remain voluntary and concern only renewable energies.
Another key principle is the strengthening of consumer protection. “For consumers it should be possible to choose the level of exposure to short term market volatility that suits their preferences”, the Member States write. Variable (or dynamic) price contracts and fixed price contracts should therefore remain available.
Link to the letter: https://aeur.eu/f/5b4 (Original version in French by Solenn Paulic)