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Brussels launches the reform of the European electricity market for public consultation

The European Commission has officially launched the reform of the European electricity market for public consultation, which will be open until February 13 with the aim of obtaining the opinion of governments, companies and consumers.

As detailed in the published document, Brussels focuses on giving more weight to long-term power purchase agreements (PPAs and CfDs) with the aim of “ensuring that energy bills for consumers and businesses are more independent of price fluctuations in the short-term markets.”

Likewise, it also seeks to protect consumers in a “better” way against excessive price volatility, promote renewable energy, encourage the use of alternatives to gas, reduce the impact of the price of fossil fuels on electricity bills and introducing improvements in transparency, surveillance and market integrity.

The European Executive maintains that the current system has allowed Europeans to enjoy an “efficient and well integrated” market, but that, in this context of energy crisis, “the current design of the electricity market has shown a series of deficiencies”. Therefore, as the letter points out, “the reforms that the Commission will undertake will correct these deficiencies and will guarantee stable and well-integrated energy markets, which continue to attract private investment on a sufficient scale as an essential enabler of the European objectives of the Green Deal and the transition to a climate neutral economy by 2050”.

Once all the contributions have been examined, Ursula von der Leyen’s team plans to present legislative proposals at the end of March.

Spanish proposal

The points put forward by the Commission share certain similarity with those of the Spanish proposal and it is that this is based on the regulator contracting long-term energy with inframarginal plants, through contracts for differences (CfDs) at a fixed price and oriented to costs, and introducing capacity markets for plants that offer firm or flexible capacity, as are the combined cycle. If the price in the daily market turns out to be higher than that of the year, the renewable installation would return the excess to consumers. On the contrary, if this is lower, it would be the system that would compensate the renewable producer so that they have guaranteed the minimum income.

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From Ecological Transition they place special emphasis on the fact that, in a context of high price volatility, term instruments are required that provide stable income for infra-marginal producers, as well as affordable and little changing prices for consumers.

On the other side of the coin are the large electric companies, who do not look favorably on the Spanish proposal since, according to them, it would cause “legal uncertainty.”

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