On the eve of the meeting of Member States’ ambassadors to the European Union (Coreper) on electricity market reform, on Friday 13 October, the Spanish Presidency of the EU Council has put forward new proposals for reaching an agreement, while some diplomatic voices are acknowledging the difficulty of the discussions ahead of the ‘Energy’ Council on 17 October.
In a new document, the Spanish Presidency has put forward a revision proposal (REV 6) for a general approach to the EU Council (see EUROPE 13262/5), which consists of deleting the provision concerning contracts for differences (CfDs) for existing power plants, i.e. investments “aimed at substantially re-equipping existing electricity generation installations, increasing their capacity or investments aimed at extending existing electricity generation installations or extending their lifetime”. The provision therefore only applies to new electricity generation facilities.
On the French side, this has prompted a reaction, notably from the MEP Christophe Grudler (Renew Europe): “In the name of respect for technological neutrality, I think it is a mistake to discriminate against nuclear power in this way”, he said via X.
In this new revision, Member States would also be authorised to apply “a cap on the income of inframarginal generators” until 30 June 2024, under the same conditions as the emergency measures introduced during the energy crisis (see EUROPE 13087/1).
There is also talk of a placeholder in the text, where a possible derogation for CO2 emission limits when applying capacity mechanisms (notably for energy produced from coal in the case of Poland) could reappear.
“Stalled” negotiations
On 19 June, the European energy ministers had failed to reach an agreement (see EUROPE 13204/1), precisely because of the provision governing contracts for differences and the way in which their revenues are redistributed, as well as the provision governing capacity mechanisms.
“Electricity market reform is being blocked by vested interests. At the ‘Energy’ Council on 17 October, legislators need to hurry to reach an agreement”, said the coalition of NGOs fighting climate change, CAN Europe, via X. “EU lawmakers are responsible for defending the Commission’s proposal from dirty political trade-offs”.
Franco-German disagreement
Asked about the issue at the Franco-German government seminar in Hamburg on 10 October, French President Emmanuel Macron, alongside German Chancellor Olaf Scholz, assured the meeting that “the Franco-German agreement” was “within reach” (see EUROPE 13268/13) and that he hoped to conclude an agreement “by the end of the month”.
Their respective teams have been negotiating to find an agreement between the two countries that will unblock the reform of the European electricity market, since they are at odds over the application of the CfDs to finance nuclear power and renewable energies.
On Wednesday 11 October, Germany’s Minister for Economic Affairs, Robert Habeck, said that the real problem was not the role assigned to nuclear energy, but “the organisation of the market in the two countries”. Germany’s concern is that, with the application of the CfDs, German industry will be disadvantaged by the production of low-cost electricity from existing French nuclear power stations, which are already depreciated and subsidised, relying on the state-owned EDF group.
“We need to clarify what a public group can do, thanks to state guarantees, that a market economy system cannot”, explained Mr Habeck, referring to the players in the German electricity market, all of whom are in the private sector.
Finally, Germany wants to see a stricter framework for the redistribution of income from CfDs in order to avoid any distortion of competition.
If the European energy ministers fail to reach agreement on 17 October, a new ‘Energy’ Council will be held on 19 December, jeopardising the prospects of an agreement by the end of the year with the European Parliament, which had already adopted its position in September (see EUROPE 13250/19). (Original version in French by Pauline Denys)