EU Lays Out New Electricity Market Design
- March 15, 2023
- Posted by: Quatro Strategies
- Category: Legislation
The European Commission on Tuesday laid out its proposed changes to the EU power market design, a reform package that focuses on boosting investment in renewable energy and protecting consumers. The proposal underlines the bloc’s aim of “bringing the lower cost of renewables to consumers” and giving them the choice for their supply contracts. It also confirmed a hedging obligation for suppliers, mentioned earlier in the EU consultation but rejected by most market participants. The reform also aims to ensure that suppliers offer different types of long-term contracts, notably fixed-price deals, with consumers being able to sign multiple contracts. And a supplier of last resort will be established in every member state.
The commission believes the measures would lead to a situation where there is less supplier bankruptcy.
An amendment of the Remit directive and a strengthening of EU energy regulators association Acer’s role in cross-border investigations is also expected to protect consumers against market manipulation.
The commission also asks member states to ensure that small companies have access to a market based guarantee for power purchase agreements (PPAs). Member states can decide to put in place that guarantee scheme, but should not provide support to PPAs that purchase generation from fossil fuels.
And contracts for difference (CfDs) were listed as the required tool states should use when support is deemed necessary for renewables and new nuclear projects.
Technological upgrades, including re-powering or life span extensions for existing nuclear plants, will also be supported through CfDs.
Renewable energy investment is expected to be boosted through “transparency obligations” for system operators on grid congestion, with further support coming from the gate closure time of the intraday market being brought closer to the time of delivery to make trading more efficient. The creation of regional trading hubs was listed as one of the ways to increase liquidity in forward markets.
A final legal text will now have to be approved by the European Parliament and EU member states before coming into force. The Commission wants the legislation to take effect before next winter and before EU elections in May-June 2024.
Subscribe to Top Insights Today
The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights
Join the ranks of global executives and subscribe to Top Insights Today
Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business
Read more insights
Special Report-China’s Iranian Crude Imports on the Rise After Additional Quotas
China’s independent refiners lined up to purchase Iranian crude oil after they were granted additional import quotas for 2021. Total imports in November were 18 million barrels, up by 40% from October. The numbers could drop in the coming months due to broader crackdown on independent refiners and reduced demand caused by virus restrictions.
Fed’s 75 Point Interest Rate Hike Raises Fears of Recession, Market Volatility
U.S. Federal Reserve’s 75 basis points rate hike, its biggest in nearly three decades, increases investor worries over recession and more volatile trading after their hopes of a soft landing for the U.S. economy is becoming more difficult. Both analysts and investors said they think a recession is more likely after the Fed hiked rates by 75 points and committed to bring more moves to fight inflation.
Would a Fab Migration Strategy Alleviate Auto Chip Supply Headaches?
Chile’s current, pro-free market constitution, drafted in 1980, has brought economic success to the Latin American nation. But in the October 2020 referendum, 78% of voters decided to throw it away altogether. For years, Chile has had one of the highest per capita GDP in the region, while leading Latin America in terms of university education and poverty reduction. Poverty decreased from 45% in 1982 to just 8% in 2014. The nation also reduced inequality and led the OECD ranking in social mobility in 2018.