Presented proposal to reform the EU electricity market

The EU Commission has announced its reform proposal to increase renewable energy sources, protect consumers and increase the competitiveness of the industry.

Accordingly, the EU electricity regulations, rules and standards will be amended.

Longer-term contracts with non-fossil fuel generators will be encouraged.

To compete with natural gas, cleaner and more flexible solutions will be introduced into the system.

The impact of fossil fuels on consumers’ electricity bills will be reduced.

The low cost of renewable energy sources will reflect on consumers.

The transparency and integrity of the electricity market will be increased.

Open and fair competition will be revived in the European wholesale energy markets.

European industry will have access to a renewable, non-fossil and affordable source of electricity for its decarbonisation and ecological transformation.

Greater price stability will be achieved in the generation of renewable and non-fossil electricity. Consumers and providers will benefit from price stability.

LONG-TERM PRICING CONTRACTS WILL BE OFFERED TO CONSUMERS

Consumers will be offered contracts that are safe and have the option of long-term pricing to avoid excessive risk and volatility. These contracts will be prepared in a more understandable language.

It will manage the price risks of electricity providers to the extent of the volumes object of the fixed contract.

In the event of a crisis, member states will be able to regulate the electricity prices applied to households and SMEs. The poor in EU countries will be protected from power cuts.

Consumers will be able to invest in wind or solar energy. Electricity produced from rooftop solar panels can be sold not only to suppliers but also to neighbors.

Member states will have to set targets and prepare programs for electricity storage to increase electricity production outside of fossil sources.

The operators of the electricity system may take measures to reduce demand at peak hours.

In order to increase the competitiveness of the EU industry, it will be prevented from being exposed to unstable electricity prices. In this framework, it will be easier for companies to enter into long-term power purchase agreements.

Companies will be able to establish their direct energy supplies and use renewable energy at more stable prices.

Public support for new investments in electricity generation from wind, solar, geothermal, hydroelectric and nuclear resources, contracts for difference will be made to pay the difference between the opening and closing prices of the contract as profit or loss. Member countries will direct additional revenue in this area to consumers.

Market liquidity will be increased with long-term contracts that fix electricity prices. This will ensure that the consumer and provider are protected against excessively volatile prices.

The EU Agency for Cooperation on Energy Regulation and national regulators will have a broader mandate to ensure the integrity and transparency of the energy market.

THE REFORM NEEDS TO BE APPROVED

In the current system, the wholesale price of electricity in the EU is determined by the final generator needed to meet full electricity demand, and often by natural gas power plants that can be brought online quickly.

The rapid increase in natural gas prices during the energy crisis last year destabilized this market, and record increases in electricity prices were observed.

The planned reform of the electricity market must be approved by the European Parliament (EP) and member states in order to be implemented.

While countries like France and Spain want to reform the electricity market on a large scale, a group of countries led by Germany is opposed.

EU Commission President Ursula von der Leyen also shared on her social media account: “Consumers are at the center of our electricity market reform.” she used the phrase.

Von der Leyen stated that the reform they have prepared will reduce the impact of natural gas on electricity bills and will reflect the benefits of low-cost renewable energy for consumers. (AA)