On Monday 19 June in Luxembourg, at the last Energy Council under the Swedish Presidency, the European energy ministers reached agreement on the REMIT regulation aimed at combating market manipulation and on the political part of the electricity market design (EMD directive) concerning consumer rights in particular. However, no political agreement has been reached on the EMD regulation, 3 months after the European Commission put forward a proposal to combat price volatility and prepare the transition of the European energy market to carbon neutrality (see EUROPE 13141/1).
“We still needed this afternoon to move towards a possible conclusion in Coreper. I’m sorry it took so long, but sometimes that’s what happens with 27 Member States in a democratic process”, explained Swedish minister Ebba Busch at the end of the afternoon’s negotiations.
CFD
At the start of the day, important points of debate were still to be settled, notably concerning the application of contracts for differences (CfDs) for existing generation capacity such as nuclear power stations, as well as their mandatory nature and the redistribution of income from these CfDs.
On this first point, the Luxembourg minister took offence. “If we were to apply the contract for differences to existing installations, this would amount to writing a cheque for 120 billion euros to EDF in France. It’s a market distortion, it’s about competition (...) we can’t accept it”.
To which the French Minister for Energy Transition, Agnès Pannier-Runacher, replied that the aim was “to have a CfD that avoids any overcompensation of producers” and that “DG COMP was looking after this”.
For these CfDs, the Swedish Presidency has also proposed a 3-year transition period and a distribution of revenues to end consumers, while leaving flexibility to the Member States.
Questions have been raised about the principle of proportionality, i.e. making the CfDs proportional to the investments made, which, according to France, would “considerably reduce the capacity for redistribution”.
Period of crisis
While the Commission’s proposal has been revised so that the EU Council has the upper hand in deciding when a crisis is declared, some Member States such as Greece, Cyprus and Spain were also in favour of capping inframarginal income when such a crisis is declared, unlike countries such as Denmark, which have explicitly stated that they are strongly opposed to this. At the time of writing, the ministers reached a potential agreement on a cap on windfall profits for renewable energy producers until 2024.
Capacity mechanisms
Lastly, the Swedish Presidency’s latest proposal concerning access to subsidies via capacity mechanisms for certain coal-fired power stations, as called for by countries such as Poland, still raised tensions between Member States (see EUROPE 13203/8).
Countries such as Belgium, Luxembourg, Portugal, Austria and Germany have denounced this opening up of capacity mechanisms to coal.
“In the Belgian capacity mechanism, national legislation already includes the obligation to become climate neutral and to significantly reduce emissions by 2030 and 2040, so this is something we cannot accept”, explained Belgian Energy Minister Tinne Van der Straeten.
Generally speaking, the Swedish Presidency is proposing greater flexibility for the Member States compared to the Commission’s proposal, as pointed out by the European Commissioner for Energy, Kadri Simson.
With regard to the introduction of regional virtual hubs, several countries, including Greece and Hungary, have asked for an impact study to be carried out.
The points on which there was most consensus concerned peak shaving products to reduce demand during consumption peaks, and PPAs (power purchase agreements), which are not obliged to have state-backed guarantee systems, but which can also have private guarantees (although these points still needed clarification).
REMIT
For its part, the REMIT regulation, which aims to strengthen the implementation and protection of the electricity market against attacks, was already the subject of a broader consensus during the debate, particularly with regard to the role of the EU Agency for the Cooperation of Energy Regulators (ACER), investigative powers and the strengthened role of the national regulatory authorities. A political agreement was therefore reached on this settlement. (Original version in French by Pauline Denys)