Parliament’s rapporteurs Nicolás González Casares (S&D, Spanish ) and Maria da Graça Carvalho (EPP, Portugal) shared with MEPs their draft report on electricity market reform and the REMIT regulation on Monday 15 May.
On the review of the electricity market design, Nicolás González Casares (S&D, Spanish) said the Commission had not gone far enough to “make energy cheaper, reduce price volatility, gain competitiveness and accelerate the growth of renewable energies” (see EUROPE 13141/1).
CfDs. With regard to the promotion of two-way Contracts for Differences (CfDs) as a form of public support, which the Commission would like to see in order to guarantee stable prices, the rapporteur’s proposal suggests that the revenue obtained from these CfDs should be given as a priority to the consumers who need it most and that it should be directed towards energy savings and the financing of the costs of the CfDs themselves.
The proposal also includes penalties for early termination by the energy producer.
PPAs. The rapporteur also focuses on PPAs (Power Purchase Agreements) as “an appropriate instrument to allow better access to private financing of mainly renewable generation capacity while providing long-term stability to the consumer”.
However, this market is currently limited to large companies. The rapporteur wishes to facilitate the entry of small players and reduce transaction costs by standardising voluntary PPAs. He also wants to create a trading platform for these contracts.
Virtual hubs. Regarding the Commission’s proposal to create ‘virtual hubs’, the report finds that it still lacks clarity, as the creation of these hubs requires “properly interconnected” regions. An impact assessment is therefore desirable before their implementation.
The proposal also asks Member States to strengthen their cooperation in order to speed up all procedures to ensure “a minimum target of 15% electricity interconnections”.
Flexibility of demand and storage. The rapporteur welcomes the Commission’s proposal on demand flexibility and storage, but proposes to strengthen it by assessing this demand on a national scale with targeted national targets.
Capacity mechanisms. The rapporteur recommends that capacity mechanisms (which remunerate existing capacity) be considered as a structural part of the reform and not just an exception. He also proposes to study how to “modernise and Europeanise” these mechanisms.
Consumer protection. With regard to the right of consumers to sign fixed-price electricity contracts, the rapporteur wants to ensure that this measure is supplemented by an obligation on suppliers not to change the terms of contracts during the course of the contract or to terminate them prematurely, but also to give consumers the right, with this type of contract, to be able to participate in energy sharing.
The report also includes an obligation for Member States to prohibit the cutting off of electricity to “vulnerable consumers”.
Energy sharing. The report suggests that energy sharing activity should be limited to a single distribution area, while limiting the size of energy facilities when owned by third parties: “The objective of the right to share energy should be the exchange of surplus production from self-consumption, not the traditional marketing of energy by other means”.
Period of crisis. In times of crisis, the Commission introduces specific measures, such as the possibility of regulated tariffs. However, the rapporteur says that the proposal does not solve the problem of how to finance them, “which means that countries with less budgetary space and, consequently, their citizens, are left at a disadvantage”.
He therefore suggests incorporating a measure introduced during the crisis in a structural way, namely, the temporary limitation of the income of inframarginal producers at European level, which the co-rapporteur Maria da Graça Carvalho has however said she is opposed to: “This could affect the dynamics of supply and demand, shifting supply to the highest bidders outside the EU. Furthermore, it would discourage consumer energy saving and industry investment, especially in renewable energy”.
MEPs can table amendments until 23 May, when a debate on the reform will take place in Parliament’s Committee on Industry, Research and Energy (ITRE).
The proposed report on electricity market reform: https://aeur.eu/f/6w4
The proposal for a report on the REMIT regulation: https://aeur.eu/f/6w5 (Original version in French by Pauline Denys)