Renewables To Get Boost With EU Electricity Market Design

• EC's proposed market design for the bloc's electricity regime targets at achieving a clean energy system that brings down the threat of price volatility
• Consumers will be protected from future price spikes and get more independence in their energy use
• These measures will also enhance the stability of the grid and provide a predictability of energy costs across the EU, according to the commission

To deal with the volatile gas prices, the European Commission (EC) plans to incentivize longer term contracts for renewable energy and encourage sharing of this clean electricity as part of its electricity market design proposal that it believes will 'accelerate a surge in renewables' and phase-out gas in the European Union (EU).

These measures will also better protect consumers from future price spikes and potential market manipulation, it added. Proposed measures are also important for the bloc to reach its climate targets of 592 GW solar PV and 510 GW wind power capacity by 2030 for which annual additions of 48 GW and 36 GW are required on an average, respectively.

"The current electricity market design has delivered an efficient, well integrated market over many decades, but tight global supply and Russia's manipulation of our energy markets has left many consumers facing massive increases in their energy bills," said the Commissioner for Energy Kadri Simson. "We are today proposing measures that will enhance the stability and predictability of energy costs across the EU."

Some of the main highlights of the proposed reforms are as follows:

1. Introduction of measures to incentivize longer term contracts with non-fossil power production to compete with gas and bring clean, flexible solutions as demand response and storage. It will boost open and fair competition in the wholesale markets.
2. There will be 2-way contracts for difference (CfD) through which member states will guarantee a stable price to producers and consumers, while channeling excess revenues to those in need.
3. It will boost liquidity of the markets for long term contracts that lock in future prices, so-called 'forward contracts'.
4. Renewable energy sharing rules will be revamped to enable consumers to invest in wind or solar parks and sell excess rooftop solar electricity to neighbors; even tenants will be able to share surplus rooftop solar with their neighbors instead of just feeding it into the grid.
5. Consumers will get a wide choice of contracts and clear information before entering contracts at long-term prices to avoid excessive risks and volatility.
6. They will also have the choice to opt for dynamic price contracts to use grid energy to charge electric cars or to use heat pumps to make use of cheaper prices.
7. It will foster price stability and reduce the risk of supplier failure. It also obliges Member States to establish suppliers of last resort so that no consumer ends up without electricity, added the commission.
8. Vulnerable consumers will be protected in arrears from being disconnected by member states.
9. Member states will be required to introduce new support schemes especially for demand response and storage.
10. Renewables integration into the grid will be facilitated through new obligations and increase transparency.

European solar PV lobby association SolarPower Europe (SPE) is happy with the proposal that 'protects all the ways we can deploy and enjoy solar energy'.

"It's a relief to see that only new solar projects which benefit from state support will be put under government-organized two-sided CfDs. We're particularly grateful to have avoided CfD as the only route to market for new solar, or retroactive CfDs on existing solar projects. Investors can trust that the terms of their investments won't suddenly change," said SPE's Head of Regulatory Affairs, Naomi Chevillard.

Proposed reforms seek to revise several pieces of the EU's existing regulations comprising Electricity Regulation, the Electricity Directive and the REMIT Regulation. These will now be discussed by the European Parliament followed by the European Council before coming into force.

A factsheet of the proposed reforms is available on the commission's website.